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AMD Trims Q3 Forecast, $1 Billion Missing, Client Processor Revenue down 40%, Halved Quarter-over-Quarter

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AMD (NASDAQ:AMD) today announced selected preliminary financial results for the third quarter of 2022. Third quarter revenue is expected to be approximately $5.6 billion, an increase of 29% year-over-year. AMD previously expected revenue to increase approximately 55% year-over-year at the mid-point of guidance. Preliminary results reflect lower than expected Client segment revenue resulting from reduced processor shipments due to a weaker than expected PC market and significant inventory correction actions across the PC supply chain.

Revenue for the Data Center, Gaming, and Embedded segments each increased significantly year-over-year in-line with the company's expectations. Gross margin is expected to be approximately 42% and non-GAAP(*) gross margin is expected to be approximately 50%. AMD previously expected non-GAAP gross margin to be approximately 54%. The gross margin shortfall to expectations was primarily due to lower revenue driven by lower Client processor unit shipments and average selling price (ASP). In addition, the third quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing, and related reserves in the graphics and client businesses.



Third quarter operating expenses are expected to be approximately $2.4 billion and non-GAAP operating expenses are expected to be approximately $1.5 billion. Non-GAAP operating expenses are lower than previous expectations of $1.6 billion driven by lower variable compensation expenses in the quarter.

"The PC market weakened significantly in the quarter," said AMD Chair and CEO Dr. Lisa Su. "While our product portfolio remains very strong, macroeconomic conditions drove lower than expected PC demand and a significant inventory correction across the PC supply chain. As we navigate the current market conditions, we are pleased with the performance of our Data Center, Embedded, and Gaming segments and the strength of our diversified business model and balance sheet. We remain focused on delivering our leadership product roadmap and look forward to launching our next-generation 5 nm data center and graphics products later this quarter."

This update does not present all necessary information for an understanding of AMD's financial condition as of the date of this release, or its results of operations for the third quarter of 2022. As AMD completes its quarter-end financial close process and finalizes its financial statements for the quarter, it will be required to make judgments in a number of areas. It is possible that AMD may identify items that require it to make adjustments to the preliminary financial information set forth above and those adjustments could be material. AMD does not intend to update any financial information prior to release of its final third quarter financial statement information, which is currently scheduled for Nov. 1, 2022.

AMD Q3'22 Earnings Conference Call
AMD will hold a conference call for the financial community at 2:00 p.m. PT (5:00 p.m. ET) on Nov. 1, 2022 to discuss its third quarter 2022 financial results. AMD will provide a real-time audio broadcast of the teleconference on the Investor Relations page of its website at www.amd.com.

View at TechPowerUp Main Site
 
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Ah, they missed guidance by a mile so they are pre-announcing. Never a good thing.

AMD stock getting slaughtered after hours, down -4.5% right now. Tomorrow won't be a pretty day for their stock but I expect a partial rebound next week.

Must have been an agonizingly long day for Dr. Su.

:(
 
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Su was asked ~1Q22, doing the worst scalping/mining frenzy in our history - "how is AMD" - her response: "*outstanding* year for AMD with record annual revenue and profitability." Yeah, she had stated that doing a time for many consumers were being gouged by scalpers, hunted by miners, and/or suffering from COVID lockdowns. But, Su thought it was still all "outstanding" even when she knew that many consumers were struggling and hurting.


Well, there is a happy ending after all, and Su is now concerned.

Reap what you sow!
 
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Maybe there will be major price cut of AM4 and AM5 in the coming months. That would be awesome
 
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Su was asked ~1Q22, doing the worst scalping/mining frenzy in our history - "how is AMD" - her response: "*outstanding* year for AMD with record annual revenue and profitability." Yeah, she had stated that doing a time for many consumers were being gouged by scalpers, hunted by miners, and/or suffering from COVID lockdowns. But, Su thought it was still all "outstanding" even when she knew that many consumers were struggling and hurting.


Well, there is a happy ending after all, and Su is now concerned.

Reap what you sow!
Well... it was "Outstanding" for all the companies that benefitted - I am sure nVidia would have said the same, no? If she was asked "How are customers doing?" I am sure her answer would have been different.

"Well, there is a happy ending after all, and Su is now concerned." What is she concerned about?

"Reap what you sow" - dude what is your problem?! What is she sowing? I think AMD is doing well under leadership or I am missing something?
 
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Well this is gonna be really bad ugly, check for Client segment ~


AMD for me was best placed to weather this storm & they got hammered, I bet this is going to be a bloodbath in the next few quarters especially for those who rely on retail consumers! Oh did I mention OPEC o_O

 

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With the brunt of the Pandemic over with and people going back to work and the lockdowns relaxing and fears of the world economy going to hell it's not surprising to see a reduction in demand for electronics considered non-essentials.
 
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Pretty sure many of them are going to have to sit back home again! It's particularly sad how many of these companies would rather decrease production instead of reducing executive "compensation" & such useless spending :shadedshu:
 
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Maybe there will be major price cut of AM4 and AM5 in the coming months. That would be awesome
Not so much, but probably new and more attractive ones.
 
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Well this is gonna be really bad ugly, check for Client segment ~


AMD for me was best placed to weather this storm & they got hammered, I bet this is going to be a bloodbath in the next few quarters especially for those who rely on retail consumers! Oh did I mention OPEC o_O

What's worse, after the report, AMD's after-hours' shares have plummeted even further. It seems all AMD's "outstanding" extra scalping/mining profits were lost in one-quarter. :laugh:
 
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Yes the thing is AMD's in a slightly better position than both Intel & Nvidia post the Xilinx acquisition IMO. I'm thinking both of them will see sharp revenue decline extending perhaps to the upcoming 1H 2023 if not longer, the more oil prices squeeze the middle class the more demand destruction will continue & yeah that goes for you too fruity loops company!
 
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Yes the thing is AMD's in a slightly better position than both Intel & Nvidia post the Xilinx acquisition IMO. I'm thinking both of them will see harp revenue decline extending even in the next 1H 2023 if not longer, the more oil prices squeeze the middle class the more demand destruction will continue & yeah that goes for you too fruity loops company!

Not really. Remember, NVIDIA's shares/M-Cap were ~$150B in the 2Q20 that had reached to its record-highs 4Q21 to ~$960B MC.

Today, NVIDIA's MC stands ~300B+. Sure, a deep lost from its record-highs (overvalued) but its today's MC, ~$300B, still stands by double compared to where NVIDIA was two-years-ago. AMD have not / cannot and will not, ever, even come close to any of these numbers.
 
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A great gain but the crypto crash
 
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All will suffer under the hand of the post-crypto, in-recession era.
Some will suffer more.
 
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Not really. Remember, NVIDIA's shares/M-Cap were ~$150B in the 2Q20 that had reached to its record-highs 4Q21 to ~$960B MC.

Today, NVIDIA's MC stands ~300B+. Sure, a deep lost from its record-highs (overvalued) but its today's MC, ~$300B, still stands by double compared to where NVIDIA was two-years-ago. AMD have not / cannot and will not, ever, even come close to any of these numbers.
Why are you we talking about market caps though? It's irrelevant when talking of revenues or potential (future) earnings.

All will suffer under the hand of the post-crypto, in-recession era.
Some will suffer more.
Their GPU division was relatively stable, check the gaming section!
 
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Their GPU division was relatively stable, check the gaming section!
I have.
My comment isn't targeted at specific company and I have no notion nor any assumption to which will suffer more.
One thing i'm sure of- I will lose quite a bit.
 
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Mote than a billion dollars of revenue knocked off third quarter forecast...

Just getting started in my view. This will be a hardware bust for the ages.

Not the time to be delivering expensive power hungry gear, that is for sure. Market has gone.
 
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Not really. Remember, NVIDIA's shares/M-Cap were ~$150B in the 2Q20 that had reached to its record-highs 4Q21 to ~$960B MC.

Today, NVIDIA's MC stands ~300B+. Sure, a deep lost from its record-highs (overvalued) but its today's MC, ~$300B, still stands by double compared to where NVIDIA was two-years-ago. AMD have not / cannot and will not, ever, even come close to any of these numbers.
Yes, because we know that people tend to invest based on the performance of the company and are totally not gambling based on hype... Such a good measurement of performance.
 
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Evaluation the company product strength by day-to-day stock market jumps nowadays is viable as deciding if the burger is tasty by counting the number of sesames on the bun.
 
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Pretty sure many of them are going to have to sit back home again! It's particularly sad how many of these companies would rather decrease production instead of reducing executive "compensation" & such useless spending :shadedshu:
In some Japanese company, maybe? Not in the West. That's the one and only purpose of corporations - to make money for the execs and the board.
At the end, they will make some money to distribute among them. Question is will it be in a sustainable way?
 
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I've been saying the writing is on the wall for the PC industry for a while. These latest product launches from Nvidia, AMD and Intel driven by their respective CEO's gold fever from the cryto boom, now finally crashing with the reality that the world doesn't want $5k gaming builds, they want to be able to pay their gas and their rent. This is just the beginning. I expect no less than 20% price cut accross the board for all of their products by the end of the year.
 

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Who could've seen that coming... I notice a few vocal members are absent in this one.

Just don't get too AMgreeD AMD, read the play.
 
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Who could've seen that coming... I notice a few vocal members are absent in this one.

Just don't get too AMgreeD AMD, read the play.
Never fear, I is here!

Do you honestly believe somehow nvidia or intel will report revenues above targets?
 
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Just don't get too AMgreeD AMD, read the play.
You're undermining the message if you think it's just relegated to AMD, in a shrinking market the "premium" brands lose just as much if not more! I was hoping the war could be over before winter but I guess that's a pipedream now.
 
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Is anyone surprised by this? The pandemic saw the biggest surge in tech and hardware sales in ages, stacked on top of the crypto boom. And given that most hardware these days is good enough to last for quite a few years, was anyone expecting anything but a major sales slump as lockdowns ended, people started taking up old (non-PC-based) hobbies and activities, and crypto crashed?

If anything, this just demonstrates - for the umpteenth time, but they never learn - how the business world seems utterly blind to the fact that capitalism forces boom-bust-cycles on global economics, and that there's no such thing as a major boom without a subsequent regression. That's just now how these systems work - there are concrete limits to how much demand can be created, no matter your marketing abilities, and when markets saturate, sales drop drastically.

The only bad thing about this is that it's treated as if it is a bad thing. This is normal. The world doesn't need runaway replacement rates of functioning products. If shareholders and finance people didn't panic at the merest sign of slowdown, this wouldn't even be worthy of note beyond "yes, obviously this is the case."
 
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