AMD Stock Falls Despite Earnings Beat: What to Know
Advanced Micro Devices beat expectations for its fourth quarter but AMD stock is still tumbling Wednesday. Here's why.
Advanced Micro Devices (AMD) stock is falling Wednesday after the semiconductor company beat top- and bottom-line expectations for its fourth quarter but came up short on data center revenue.
In the three months ending December 28, AMD's revenue increased 24.2% year over year to $7.7 billion, boosted by 69.1% growth in its Data Center segment to $3.9 billion. Earnings per share (EPS) rose 41.6% from the year-ago period to $1.09.
"2024 was a transformative year for AMD as we delivered record annual revenue and strong earnings growth," said CEO Dr. Lisa Su in a statement. In addition to data center growth, Su highlighted acceleration of EPYC processor adoption and $5 billion of AMD Instinct accelerator revenue.
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Investors, however, are focusing on the relative weakness in AMD's AI-related business rather than the strength in its core personal computing segment.
And data center revenue came up short of expectations of $4.1 billion, though headline results beat analysts' expectations. Wall Street was anticipating revenue of $7.5 billion and earnings of $1.08 per share, according to CNBC.
For its first quarter, AMD said it expects to achieve revenue of approximately $7.1 billion, plus or minus $300 million. Meanwhile, analysts were anticipating $7 billion.
"Looking into 2025, we see clear opportunities for continued growth based on the strength of our product portfolio and growing demand for high-performance and adaptive computing," Su said.
Is AMD stock a buy, sell or hold?
AMD stock struggled in 2024, generating a loss of more than 18% vs a gain of more than 25% for the S&P 500. Yet Wall Street remains bullish on the semiconductor stock.
According to S&P Global Market Intelligence, the average analyst target price for AMD stock is $154.55, representing implied upside of about 44% to current levels. And the consensus recommendation is Buy.
Financial services firm Wedbush maintained its Outperform rating (equivalent to a Buy) and $150 price target on the large-cap stock after the earnings release.
"We view the sell-off post AMD's report as overdone," wrote Wedbush analyst Matt Bryson in a Wednesday morning note.
Bryson notes that "investors were already assuming softer forward AI sales" and says "more attention should be paid to AMD's robust client compute business."
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