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AMD shares sank by 7% in after market after the firm’s fourth quarter guidance added to investor fears of tight supply constraining semiconductor designers’ ability to meet lofty profit and revenue expectations. The firm earned $6.82 billion in revenue and $0.92 in adjusted EPS for its third quarter, both of which beat analyst estimates. Analysts had penned AMD’s revenue and earnings at $6.7 billion and $0.70, respectively making the third quarter results a strong beat. However, AMD’s Q4 revenue guidance of $7.2 billion to $7.8 billion, with a midpoint of $7.5 billion, missed analyst estimates of $7.54 billion.
AMD Data Center Revenue Continues To Soar But Tepid Guidance Hurts Stock
While AMD’s fourth quarter guidance fell short of analyst estimates, the firm’s data center business continued to perform as it benefited from the growing rise in high performance computing. During Q3, the firm raked in $3.5 billion in revenue, which marked a 122% annual growth. At the same time, AMD’s data center operating margin, which measures the profit that the division earns after direct and indirect costs are accounted, for sat at 29% for a ten percentage point annual growth from the year ago quarter’s 19%.
However, even though AMD’s Data Center revenue grew by nearly $2 billion, the gains were overshadowed by a sharp drop in Gaming revenue. The firm’s Gaming division measures AMD’s GPU and gaming GPU sales,…
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