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.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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."
Related Content
-
E-ZPass Scam Texts are Still Going Around. Here's What to Look Out ForScammers have been sending fake texts about E-ZPass for over a year. Know what to look out for and what to do.
-
A Savings Tool to Empower People With DisabilitiesAn ABLE account can improve quality of life for individuals with a disability — it permits tax-free saving for ongoing expenses without jeopardizing benefits.
-
Social Security Fairness Act: Five Financial Planning Issues to RevisitMore money as a public-sector retiree is great, but there could be unintended consequences with taxes, Medicare and more if you're not careful.
-
Social Security Warning: Five Missteps Too Many Women MakeClaiming Social Security is complicated, and for women the stakes are high. What you don't know can cost you, so make sure you do know these five things.
-
To Buck the Third-Generation Curse, Focus on the Family StoryThe key is to motivate the next generations to contribute to the family business in a productive way. You can look to Lawrence Welk's family as a prime example.
-
Walmart's Transformative Ways Spark a 100,000% Stock ReturnWalmart's strategic store expansion and relentless cost-cutting have catapulted its share price over the years.
-
20 Ways to Clean Up Your Finances This SpringSpring cleaning is therapeutic and stops costly problems from building up around the home. Why not tackle the dusty corners of your finances at the same time?
-
How Roth Accounts Can Ease Your Tax Burden in RetirementStrategic Roth IRA conversions can set you up for tax-free income in retirement and a tax-free inheritance for the people you love.
-
Are You a High Earner But Still Broke? Five Fixes for ThatIf you're a HENRY (a higher earner, not rich yet) but feel like you still live paycheck to paycheck, there are steps you can take to get control of your financial future.
-
Tax Diversification: Smart Ways to Preserve Your Nest EggA long and active retirement may be costly — and may even bump you into a higher tax bracket. Paying some taxes on your savings now could be the answer.
