{"id":18948,"date":"2023-11-08T18:21:28","date_gmt":"2023-11-08T15:21:28","guid":{"rendered":"https:\/\/roboforex.com\/blog\/?p=18948"},"modified":"2024-04-15T13:50:56","modified_gmt":"2024-04-15T10:50:56","slug":"amds-profit-surged-by-over-1000-implications-for-the-stock","status":"publish","type":"post","link":"https:\/\/roboforex.com\/blog\/2023\/11\/08\/amds-profit-surged-by-over-1000-implications-for-the-stock\/","title":{"rendered":"AMD's Profit Surged by Over 1000%: Implications for the Stock"},"content":{"rendered":"\n

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Advanced Micro Devices Inc. (NASDAQ: AMD) saw its net profit for Q3 2023 soar by an impressive 1007% compared to Q2 2023, reaching 299 million USD. It is worth noting that its primary competitor, Intel Corp<\/a>. (NASDAQ: INTC), reported a net profit<\/a> of 2 million USD lower for the July to September period.<\/p>\n\n\n\n

In today’s article, we will examine AMD’s quarterly financial statistics, look at the potential drivers of this massive profit surge, delve into the forecasts provided by the corporation’s management and Wall Street analysts, conduct a technical analysis of the stock, and talk about the risks of investing in these securities.<\/p>\n\n\n\n

<\/span><\/a>Analysis of the Q3 2023 report of Advanced Micro Devices<\/span><\/h2>\n\n\n\n
Advanced Micro Devices Inc. released<\/a> its Q3 report on 31 October 2023. Revenue increased by 4% compared to the figures from the same period in 2022, reaching 5.8 billion USD. Net profit skyrocketed 353% and 1007% compared to Q3 2022 and Q2 2023, respectively, reaching 299 million USD, with EPS surging 350% and 800% to 0.18 USD. Operating profit stood at 224 million USD, marking a 450% increase from the previous year.<\/p>\n\n\n\n
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<\/span><\/a>AMD’s Q3 2023 revenue by segment<\/span><\/h3>\n\n\n\n
Segment<\/strong><\/td> Q3 2023 Revenue<\/strong><\/td> Y\/Y<\/strong><\/td> Q\/Q<\/strong><\/td> Driver<\/strong><\/td><\/tr>
Data Center<\/td> 1.6 billion USD<\/td> +0%<\/td> +21%<\/td> Strong demand for 4th Gen AMD EPYC processors<\/td><\/tr>
Client<\/td> 1.5 billion USD<\/td> +42%<\/td> +46%<\/td> Higher sales of Ryzen processors for PCs, laptops, and tablets <\/td><\/tr>
Gaming<\/td> 1.5 billion USD<\/td> −8%<\/td> −5%<\/td> Declining demand following a boom caused by the COVID-19 pandemic and mining popularity<\/td><\/tr>
Embedded<\/td> 1.2 billion USD<\/td> −5%<\/td> −15%<\/td> A drop in revenue in the communications market<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
<\/span><\/a>Drivers of growth in Advanced Micro Devices net profit for Q3 2023<\/span><\/h3>\n\n\n\n
A surge in Advanced Micro Devices Inc.’s net profit for July to September 2023 is likely to be attributed to increased revenue and strict expenditure control.<\/p>\n\n\n\n
The below diagram shows operating expenses, gross profit, revenue, and net profit for four quarters from Q4 2022 to Q3 2023. As we can see, AMD’s operating expenses for this period have hardly changed, remaining at about 2.5 billion USD. However, compared to the figures for the end of 2021, they nearly doubled, driven by increased investments in AI-related products.<\/p>\n\n\n\n
It follows from the diagram that gross profit for Q3 2023, which is linked to earnings, surpassed the operating expenses in contrast to the preceding three quarters. The result for July to September indicates that the net profit significantly outperformed the previous quarters.<\/p>\n\n\n\n
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Advanced Micro Devices Inc.’s financial performance<\/em><\/figcaption><\/figure>\n\n\n\n<\/span><\/a>AMD forecast for Q4 2023<\/span><\/h2>\n\n\n\n
The corporation’s management expects that Q4 2023 revenue will amount to 6.1 billion USD, reflecting a 9% year-over-year growth and a 5% quarter-over-quarter increase. The company predicts that such results could be attributed to a two-digit increase in Client and Data Center segment revenues. At the same time, the Gaming and Embedded segments are expected to experience a decrease in revenue.
Advanced Micro Devices Inc. specifically noted the strong demand for GPUs used in the artificial intelligence field. The company projects revenue of 400 million USD from the sales of these products in Q4 2023, with the potential to reach 2 billion USD based on the 2024 results.<\/p>\n\n\n\n
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<\/span><\/a>Expert forecasts for AMD shares for 2023-2024<\/span><\/h2>\n\n\n\n
According to Barchart<\/a>, at the time of drafting on 6 November 2023, 21 of 28 analysts rated Advanced Micro Devices Inc. stock as Strong Buy and set an average price target of 139 USD per unit. Six analysts assigned a Moderate Buy rating, with only one expert recommending holding the stock in the portfolio. It is worth noting that there are no recommendations to sell AMD’s shares.<\/p>\n\n\n\n
Analysts at Tech Stock Pros have raised their rating from “Sell” to “Hold”, saying<\/a> that they believe the more conservative forecasts provided by the company’s management for the upcoming period are closer to reality. These adjustments allow the company to move from pursuing ambitious projected figures. On the other hand, analysts from Bank of America<\/a> do not recommend<\/a> buying Advanced Micro Devices Inc.’s stock and have rated it as “Hold”. They are concerned that AI-related earnings will not be sufficient to compensate for the declining revenue in the Gaming and Embedded segments.<\/p>\n\n\n\n
<\/span><\/a>AMD stock analysis<\/span><\/h2>\n\n\n\n
Advanced Micro Devices Inc.’s stock broke the trend line on 6 October 2023, leaving the descending channel, which could suggest the end of the downtrend. The quotes later tested the trend line from the other side and rebounded from it. This might serve as an additional signal confirming a potential price rise.<\/p>\n\n\n\n
The release of the quarterly report drove AMD’s stock up with the price breaking the resistance level at 111.50 USD. It can be presumed that the quotes may reach the resistance levels at 120.00 and 132.00 USD next. However, if the price returns to 95.70 USD, this might cancel the stock appreciation scenario, leading to a potential decline in the price to the support level of 81.00 USD.<\/p>\n\n\n\n
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Advanced Micro Devices Inc.’s stock chart<\/em><\/figcaption><\/figure>\n\n\n\n
<\/span>Advanced Micro Devices Inc. live chart<\/span><\/h2>\n\n\n\n\n