What To Expect From AMD’s Q2 Results?

Superior Micro Gadgets inventory (NASDAQ
NDAQ
: AMD) is predicted to publish its Q2 FY’23 outcomes on August 1 reporting on one other quarter that noticed declining PC gross sales and considerations about broader know-how spending by giant corporations. We count on the corporate’s revenues to come back in at about $4.8 billion, consistent with consensus estimates though this is able to mark a year-over-year decline of about 26%. We venture that earnings will are available at about $0.53 per share, barely forward of the consensus estimate and down by about 50% versus final yr. See our dashboard AMD Earnings Preview for a better have a look at what to anticipate when the corporate publishes outcomes.

The broader PC market has confronted headwinds over Q2 as demand for PCs cools publish Covid-19. Counterpoint estimates that PC shipments fell by about 15% year-over-year in Q2 2023, though shipments did see a sequential enchancment of 8% versus Q1. This might doubtless influence gross sales of AMD’s shopper computing phase. Nonetheless, whereas PC distributors labored by way of chip stock that they constructed up over final yr in Q1, issues may get higher in Q2 as stock ranges doubtless come down. Issues may very well be a bit extra secure on the server entrance as AMD continues to achieve share over rival Intel
INTC
, which has confronted points transitioning to smaller, extra superior course of nodes. Furthermore, AMD’s chips are additionally perceived to have a greater price-to-performance ratio than Intel’s. Nonetheless, total we count on AMD’s CPU gross sales to see a significant decline over final yr.

Individually, we might be watching the efficiency of AMD’s GPU gross sales, contemplating the surge in demand for graphics chips following the success of the AI chatbot ChatGPT. Graphics processing items have gotten the de-facto chips for operating AI-related workloads. Whereas AMD’s GPUs have sometimes been used extra for gaming {and professional} purposes in comparison with Nvidia’s chips, that are the go-to GPUs for accelerated computing purposes, AMD can also be now specializing in profitable over the AI market. The corporate has introduced new chips such because the MI300X chip focused particularly at giant language mannequin coaching and inference for generative AI workloads. We might be in search of updates on the identical when AMD publishes earnings.

Now, is AMD inventory nonetheless a purchase on the present market worth of about $113 per share? AMD inventory trades at about 44x consensus 2023 earnings. Furthermore, the corporate’s prime line is more likely to see little to no progress this yr amid continued strain on the shopper aspect of the enterprise. Longer-term progress within the PC market can also be more likely to stay muted, with progress between 2023 and 2027 projected at a mean annual fee of two.9%. ^[1] Contemplating this, we predict the inventory could also be barely overvalued at this juncture. We worth AMD inventory at about $84 per share, which is about 26% beneath the present market worth. See our evaluation on AMD Valuation: Is AMD Inventory Costly Or Low cost? for extra particulars on what’s driving our worth estimate for AMD. Additionally, take a look at our evaluation of AMD Income for extra particulars on the corporate’s key income streams.

What in case you’re in search of a portfolio that goals for long-term progress? Right here’s a worth portfolio that’s accomplished significantly better than the market since 2016.

Make investments with Trefis Market Beating Portfolios

See all Trefis Worth Estimates