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(Reuters) -Advanced Micro Devices Inc on Tuesday forecast some strength in its data center business and promised to be careful with spending, sending shares up despite business being hit by a deepening PC market slump.
AMD forecast fourth-quarter and full-year revenue below Wall Street estimates, but Kinngai Chan, an analyst at Summit Insights Group, suggested investors were braced for worse.
“While AMD’s 4Q22 sales outlook was below consensus expectations, we believe investors are somewhat relieved that AMD expects its data center and embedded businesses to grow sequentially,” Chan said.
While AMD is not immune from the PC downturn, Anshel Sag, chip analyst at Moor Insights & Strategy, agreed that AMD’s data center numbers and excitement over a new graphics chip launch later this week was helping sentiment.
Executives on a conference call also said that the company was prudently controlling expenses and headcount growth.
Shares rose 6.3% in after-hours trade.
AMD, which makes CPUs and graphics processors for PCs and data centers, has been hit hard as inflation hurt consumer demand for laptops and other gadgets, prompting electronics makers to cut orders for its chips.
That led AMD to lower its forecast for third-quarter revenue by about $1 billion last month.
According to Counterpoint Research, PC shipments will decline 13% this year. They fell 19.5% in the third quarter, according to research firm Gartner (NYSE:IT).
“Third quarter results came in below our expectations due to the softening PC market and substantial inventory reduction actions across the PC supply chain,” said AMD Chair and Chief Executive Lisa Su, adding that the data center, gaming console, and so-called embedded market helped support growth.
She added that the North American cloud market was the most resilient of the data center market segments, though she did not expect significant recovery of the China data center market in 2023.
The company expects current-quarter revenue to be $5.5 billion, plus or minus $300 million. Analysts on average expect revenue to be $5.85 billion, according to Refinitiv data.
For the full year 2022, AMD expects revenue to be approximately $23.5 billion, plus or minus $300 million, up 43% from 2021, versus analyst expectations of $23.9 billion.
Revenue at its client segment, which includes chips for desktops, fell 40% to $1 billion during the third quarter. While its Data Center revenue was $1.6 billion, up 45% year-on-year.
