AMD Chair and CEO, Lisa Su, delivered a keynote address at the Consumer Electronics Show (CES) in Las Vegas, Nevada on January 4, 2023. The event highlighted the latest developments in the technology industry. Chip stocks experienced a slight decline following AMD’s disappointing revenue forecast, which raised concerns about the fragility of the PC market and reduced spending from businesses. AMD’s shares dropped by 7%, while Marvell, Nvidia, Intel, and Texas Instruments also saw significant declines. However, the entire tech market faced a decline, with the Nasdaq dropping 2.1%, marking its second-worst day of the year.
In the company’s third-quarter report, AMD stated that it expects $5.7 billion in sales, slightly lower than analysts’ projected revenue of $5.81 billion. The decline in revenue was primarily attributed to a weaker PC market, resulting in a 54% drop in second-quarter revenue in the client segment. Additionally, sales in the data center business fell by 11% due to soft enterprise demand. The semiconductor industry as a whole experienced a downturn as Fitch Ratings downgraded the United States’ long-term foreign currency issuer default rating from AAA to AA+. This downgrade was mainly motivated by the expected fiscal deterioration, erosion of governance, and growing debt burden.
Despite these challenges, Lisa Su remains optimistic about AMD’s prospects for growth. During an interview with CNBC’s “Squawk on the Street,” she acknowledged the volatility of the PC market but emphasized that AMD expects to see growth in the second half of the year. Jefferies analysts reiterated their buy rating on the stock and highlighted the potential for a PC recovery.
AMD is well-positioned in the market due to its high-end graphics processing units (GPUs) that are essential for artificial intelligence applications. Analysts are monitoring AMD’s server chips to determine if they can gain market share against key competitor Intel. Su emphasized the company’s commitment to generative AI and its collaboration with partners like Microsoft to enhance productivity. During the quarter, AMD introduced the MI300X chip, designed for building and running AI models, and it is currently being sampled by customers with production set to ramp up in the fourth quarter.
In conclusion, despite the challenges faced by the PC market and the semiconductor industry, AMD remains optimistic about its growth prospects, especially in the AI sector. The company’s strong performance in high-end GPUs and its strategic partnerships position it well for future success.
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