After the chipmaker indicated that it is looking for the server chip business to grow in the quarters ahead, shares of Advanced Micro Devices rose as much as six percent.
The company did what it was supposed to.
According to a statement, overall revenue grew by 29% in the third quarter. A maker of chips called field-programmable gate array was acquired by Advanced Micro Devices.
The results for the third quarter of the fiscal year were not as good as they could have been due to a weaker PC market. The stock plummeted in its largest decline in over a year.
The company said it sees $23.50 billion in revenue for the full year, down from its August forecast of $26.3 billion. The analysts had expected $23.88 billion. The company's adjusted gross margin outlook was revised downward.
The Data Center segment of the company generated $1.61 billion in revenue in the third quarter, up 45% from the second quarter and slightly below the Street Account consensus of $1.64 billion. The unit is made up of contributions from both Pensando and Xilinx, which were acquired by Advanced Micro Devices.
The Genoa server chips from the chipmaker have been in high demand. The data center chips are expected to be launched in November.
Although there may be some near-term progress at the North American cloud vendors, we continue to believe that over the medium term, it is individual footprints and efficiency at individual cloud vendors that are important. We expect growth in that market due to the strength of our product portfolio and overall general coming forward.
Su said revenue from server makers targeting big companies was down while cloud revenue was up. She said enterprise customers are taking longer to make decisions and are less conservative on capital expenditures.
The data center business looks decent, and quite a bit better than what is happening with Intel, said a Bernstein analyst in an interview on CNBC. There was a lot of uncertainty after Intel called for the market to decline in the fourth quarter. The stock is up right now. It seems like the guide is isolated to PCs.
The gaming segment generated over 1.5 billion dollars in revenue. The increase was in line with the consensus among analysts. As the holidays approach, the company claims healthy demand for consoles.
The Embedded segment delivered more than $1 billion, up from $79 million in the year-ago quarter, and in line with the StreetAccount consensus.
The chipmaker warned about the Client unit in October and it brought in over a billion dollars. The StreetAccount consensus was over a billion dollars. The decline in third-quarter PC shipments was the worst for the company since it started following the market in the mid 1990s, according to a research firm. Positive reviews of the products were pointed out by the company.
Su said that the company worked closely with customers to reduce inventory.
The four segments delivered more revenue than the company had said it would.
Su said that they would continue to invest in the data center, embedded and commercial markets. The CFO of the company said that the company will control expenses.
The S&P 500 index is down more than 20% this year, while the stock of Advanced Micro Devices has fallen more than 50%.
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