Advanced Micro Devices Inc. gets to show Wall Street if it âcertainlyâ ended 2022 in a better place, after the price of clearing inventory helped gut results from rival Intel Corp.
AMD
AMD,
is scheduled to report earnings after the close of markets on Tuesday.
AMD Chief Executive Lisa Su said three months ago that the companyâs outlook, which fell below Wall Street estimates at the time, included the cost of clearing out inventory, and that the company would âcertainly exit the year in a better place.â Su also said that data-center sales were âexpected to grow.â
Doubts about data-center demand and the cost of excess inventory have grown though, after Intel
INTC,
reported earnings that showed inventory clearance was gutting gross margins as the CPU maker faced the worst PC shipment declines in recorded history. Additionally, Intel said it expected the overall data-center market to fall at âan accelerated rate.â
Read: âItâs not an earnings release, itâs a crime sceneâ: Analysts, and social media, react to Intelâs awful quarter
Bernstein analyst Stacy Rasgon, who downgraded AMD to market perform from outperform recently, said AMD had âno margin for errorâ in its report, and this was before he saw Intelâs âastonishingly badâ outlook fail to beat already low expectations âwith revenues and gross margins collapsing amid a further weakening environment and an absolutely massive inventory flush.â
Rasgon said the PC market has worsened considerably, to the point where his âbelief that AMD would prove relatively more immune to channel degradation proved unfortunately incorrect.â
And with jammed channels, another analystâs forecast from nearly two years ago appears to be coming to fruition: Intel is resorting to a price war, or what Rasgon called âIntelâs semi-destructive behavior as of late as they use both price and capacity as a strategic weapon.â
âIn response, we have seen AMDâs new client parts available at heavy discounts at retail less than 2 months after launch (much deeper, and much more rapidly than the prior generation),â Rasgon said.
Opinion:Â Intel just had its worst year since the dot-com bust, and it wonât get better soon
AMD, Intel, and Nvidia Corp.
NVDA,
had all poured new models of gaming cards into the holiday channel at a time when PC shipments are dropping at their steepest recorded rates and a wave of secondhand graphics-processing units, or GPUs, hit the market as unprofitable cryptocurrency-mining operations folded.Â
âAMD stock should be bigger focus and PC fears are high there despite share gain expectations in server,â Mizuho desk analyst Jordan Klein said in emailed comments. âMy view is buyside wants AMD to guide maybe flat growth for â23 vs cons 5% due to PC flush, then start to slowly buy that weak guide.â
This will be the first report for AMD since it announced the hiring of Jean Hu from Marvell Technology Inc.
MRVL,
as its new chief financial officer. Hu started at AMD on Jan. 23, succeeding the retiring Devinder Kumar.
Read: AMD is making history for Asian women executives