Advanced Micro Devices, Inc, a chip designer, released its earnings report for the first quarter of 2023 earlier. AMD earned $5.4 billion in revenue in the first quarter, representing a 9% annual increase when compared to competitors, and the figure was above the high end of analyst guidance. The company’s bottom line, on the other hand, took a significant hit, with GAAP earnings per share falling by 116% but non-GAAP EPS falling by 47%. Analysts typically focus on GAAP results because AMD’s GAAP EPS includes non-core expenses such as acquisition costs.
The Client computing segment is the highlight of Advanced Micro Devices earnings report. This division handles the company’s personal computing products, and it was widely expected that the segment would suffer a bloodbath prior to the recent report. AMD’s Client segment generated $739 million in revenue during the quarter, representing a 65% drop and becoming the company’s worst performing division.
As a result, it reported a $172 million loss because the costs of the products exceeded their net sales. At the same time, AMD’s data centre segment was hit by a slowing economy. Datacenter has been one of the better-performing business divisions recently, but it appears that higher capital costs and other factors are limiting corporate spending in the segment.
AMD’s data centre revenue was $1.3 billion in the quarter, flat year on year.
At the same time, an inflationary environment reduced segment operating income, which stood at $148 million during the quarter, compared to $427 million the previous year.
Ms. Jean Hu, AMD’s chief financial officer, commented on the results, stating that data centre is now the company’s largest earner. Ms. Hu also had some sobering news for AMD’s PC fans this quarter, stating that the expected growth in data centre spending can be offset by a drop in the client computing segment during the current quarter.
These are sequential growth/drop figures, implying that the Advanced Micro Devices’s personal computing segment may have one more quarter before hitting rock bottom, from which there is no way but up.
Cloud computing product demand surged during the quarter, boosting the segment’s revenue. However, processor shipments fell, and the sector as a whole ended up cancelling each other out as it remained flat year on year.
On the client computing front, inventory issues in the channel persist. AMD confirmed that it is still shipping processors to the market in order to ensure that the current retail inventory is consumed. The first quarter also marked the first time that AMD’s embedded revenue accounted for all of Xilinx’s revenue. This naturally aided the segment’s performance, with Embedded increasing its sales 163% year on year to $1.6 billion.
Finally, it appears that AMD is unsure whether sales from the Client segment will grow for the full year, as the firm’s guidance only expects growth from Datacenter and Embedded. At the time of publication, the company’s shares were down 6.6% in aftermarket trading. The company’s revenue guidance for the current quarter is $5.3 billion, which is lower than Wall Street’s forecast of $5.5 billion, indicating that the semiconductor market is slowing more than expected.
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