Semiconductor giant AMD (AMD) will announce its first quarter results after bell on Tuesday. The announcement follows last week's disappointing report from rival Intel. Intel (INTC) outperformed on top and bottom lines, but the company gave a weaker-than-expected earnings outlook for the current quarter, sending its stock down.
Investors and analysts will focus on two key metrics in AMD's report: AI chip sales and PC market performance. The company released its MI300 series of AI accelerators in December 2023 and began shipping units shortly thereafter. The sales of these chips could have a major impact on AMD's stock price after the company announces its financial results.
Wall Street expects earnings per share (EPS) of $0.61 and revenue of $5.45 billion. This is a slight increase compared to the same period last year, when AMD reported EPS of $0.60 on revenue of $5.35 billion.
AMD's MI300 chip is meant to go head-to-head with Nvidia's (NVDA) best-selling H100 accelerator series. The company has previously said the MI300X outperforms Nvidia's chips, but Nvidia has rejected this claim. Intel is also chasing his Nvidia's H100 platform with Gaudi 3 accelerators.
However, NVIDIA announced the H100's successor, the Blackwell platform, at the GTC conference in March. This platform should provide better performance than the previous platform.
The AI arms race isn't slowing down anytime soon either. Microsoft (MSFT), Google (GOOG, GOOGL), and Meta (META) each announced that they are pouring money into AI data center capabilities to build and support their various software products.
However, it remains to be seen whether AMD will be able to take significant market share from market leader Nvidia. MI300X sales should reach billions of dollars this year, said UBS Global Research analyst Timothy Arcuri.
“We very strongly believe that $5 billion to $6 billion in revenue this year remains conservative for the MI300, and we view guidance as being OK,” he said in a note to investors ahead of earnings. .
For the quarter, Wall Street expects data center revenue to be $2.31 billion, representing a 78% year-over-year increase.
Beyond AI sales, Wall Street will be watching the recovery of the PC market and its impact on AMD's sales. According to IDC, global PC shipments increased by 1.5% in the first quarter of 2024, marking the first quarterly growth after two years of decline.
Intel has already reported that revenue at its PC chip division, Client Group, rose 31% year over year in the latest quarter. This should bode well for AMD. Both companies are promoting their own AI PCs, or laptops and desktops, that can run generated AI apps locally rather than via the web.
Analysts expect sales for AMD Client, the division that includes PC chip sales, to rise 74% year over year to $1.29 billion in the quarter.
But Intel and AMD aren't the only companies pushing into the AI PC market. Qualcomm (QCOM) is entering its own market with its new Snapdragon X Elite and Snapdragon X Plus chips for laptops.
Despite healthy growth forecasts for its data center and client divisions, Wall Street expects the company's gaming and embedded divisions to decline 45% and 40%, respectively.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter @Daniel Howley.
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