Why AMD May Weather the PC Storm Better Than Intel

Advanced Micro Devices Inc. (NASDAQ:AMD) stock surged more than 7% in Wednesday’s premarket trading after the chipmaker reported better-than-expected third-quarter results and issued an upbeat revenue forecast.

Strong data center demand and optimism about next-generation AI chips helped lift sentiment. Broader markets also gained, with Nasdaq futures rising 0.62% and S&P 500 futures climbing 0.71%.

AMD Beats Earnings Estimates, Raises Revenue Outlook

AMD reported third-quarter revenue of $13.38 billion, beating Wall Street’s estimate of $13.09 billion. Adjusted earnings of $2.09 per share topped the $1.95 consensus.

Operating income reached $2.8 billion. The company ended the quarter with $7.4 billion in cash and cash equivalents and $8.37 billion in short-term investments.

AMD forecast fourth-quarter revenue of approximately $17 billion, plus or minus 3%, above the $16.23 billion consensus.

However, the company expects adjusted gross margin to fall to 55% from 56% in the third quarter.

CEO Lisa Su expressed confidence in AI infrastructure demand through 2027. AMD is working with customers to secure land, power and data center capacity ahead of its Venice, MI455 and Helios launches.

Bernstein Flags PC Weakness, Margin Pressure

Bernstein analyst Stacy Rasgon told CNBC that AMD delivered stronger results than Intel Corporation (NASDAQ:INTC), despite weakness in its PC business.

AMD’s Data Center revenue exceeded expectations by roughly $300 million, while its fourth-quarter outlook also beat estimates.

Rasgon said PC and memory market pressures remain concerns. However, AMD faces less exposure than Intel because its Client business accounts for a smaller share of revenue.

He highlighted the upcoming Helios MI450 platform as a growth driver.

Rasgon said these growth drivers could help AMD offset PC market pressures that have weighed more heavily on Intel.

Still, AMD’s 55% gross margin forecast fell short of Wall Street’s 55.5% estimate. Rasgon attributed the pressure partly to lower-margin AI GPUs and higher memory content.

Wedbush Sees Strong AI Demand Through 2027

Wedbush Managing Director Matt Bryson told CNBC that AMD showed no signs of weakening data center demand.

Bryson highlighted management’s expectation for revenue to grow roughly 80% next year, implying more than $94 billion in sales.

He also cited expectations for EPYC sales to double.

Despite lower margins on Instinct AI accelerators, Bryson said AMD’s forecast for gross margins in the mid-50% range remained achievable.

Options Traders Anticipated Sharp Move

Ahead of the earnings release, CNBC’s Oliver Renick said options traders expected a 7.3% stock move.

Put and call positions were roughly balanced, although call buyers appeared more aggressive.

The results also offered a potential boost to semiconductor sentiment following Intel’s post-earnings decline.

Technical Analysis

AMD traded at $516.80, below its 20-day simple moving average (SMA) of $553.92 and 50-day SMA of $548.70. However, the stock remained 25.2% above its 200-day SMA of $412.94, suggesting its longer-term uptrend remained intact.

The moving average convergence divergence (MACD) indicator remained below its signal line, pointing to weakening bullish momentum.

Immediate resistance stood near $517.50, while support was around $502.50.

AMD gained 93.52% over the past 12 months, with a 52-week trading range of $188.22 to $658.52.

Price Action

AMD Price Action: Advanced Micro Devices shares were up 7.05% at $518.00 during premarket trading on Wednesday, according to Benzinga Pro data.

Photo via Shutterstock