Advanced Micro Devices stock fell Wednesday after the chipmaker beat expectations for the first quarter but came up short with its sales forecast for the second quarter. AMD stock dropped below a key support level on the news.
The Santa Clara, Calif.-based company late Tuesday said it earned an adjusted 60 cents a share on sales of $5.35 billion in the March quarter. Analysts polled by FactSet had forecast AMD earnings of 56 cents a share on sales of $5.31 billion. On a year-over-year basis, AMD earnings sank 47% while sales dropped 9%.
For the second quarter, AMD predicted revenue of about $5.3 billion. However, Wall Street was looking for $5.5 billion. In the same quarter last year, AMD sales were $6.55 billion.
"We remain confident in our growth in the second half of the year as the PC and server markets strengthen and our new products ramp," Chief Financial Officer Jean Hu said in a news release.
AMD Stock Slides After Quarterly Report
On the stock market today, AMD stock dropped 9.2% to close at 81.62. With the move lower, the stock slashed through its 50-day moving average line, a key support level.
AMD reported $1.3 billion in data-center chip sales in the first quarter, up a fraction from the same period last year. But PC chip revenue crashed 65% year over year to $739 million amid weak personal computer sales.
Meanwhile, gaming chip sales dipped 6% to $1.76 billion. Further, embedded processor sales jumped 162% to $1.56 billion in the first quarter.
Analysts Diverge On Advanced Micro Devices
Wall Street analysts were split in their reactions to the AMD earnings report. At least seven brokerage firms raised their price targets on AMD stock after the report. But two firms cut their price targets.
BofA Securities analyst Vivek Arya downgraded AMD stock to neutral from buy. He also trimmed his price target to 95 from 98.
AMD faces a "range of headwinds" including aggressive pricing moves by rival Intel, Arya said in a note to clients.
AMD shares have an IBD Composite Rating of 98 out of 99, according to IBD Stock Checkup.
Moreover, AMD stock is on three IBD stock lists: IBD 50, Big Cap 20 and Tech Leaders.
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