Advanced Micro Devices (AMD) Information Technology – Semiconductors | Reports October 20, After Market Closes
AMD’s Q3 Earnings – Key Takeaways
- The Estimize consensus is calling for earnings per share of 1 cent on $1.22 billion in revenue, 1 cent higher than Wall Street on the bottom line and right in line on the top
- AMD is strengthening its position in its core GPU and CPU markets, with the launch of the Polaris graphic cards and Zen processor during the quarter
- Recent efforts to enter new technologies such as virtual reality bode well for future growth
- What are you expecting for AMD? Get your estimate in here!
AMD has been one of the best comeback stories over the past year. After years of the stock getting consistently being beaten down, shares are up well over 100% in 2016 and nearly 250% from a year earlier. This is a testament to a strong portfolio of GPU and CPUs and advancements in new technologies such as virtual reality. AMD has steadily closed the gap on its two biggest competitors, Nvidia and Intel, and is now being considered a major player in the semiconductors space. Tomorrow’s results are expected to build on its past success and continue to drive share prices higher.
Analysts surveyed at Estimize are calling for earnings per share of 1 cent, 106% higher than the same period last year. That estimate has jumped 44% since AMD’s most recent report in July. Revenue for the period is anticipated to jump 15%, marking a second consecutive quarter of positive growth. Shares historically remain flat immediately through the print but tend to increase by as much as 6% in the 30 days following a report.
AMD’s gains come largely due to the success of some of its recent products. Its Polaris GPU and Zen processor have both come with rave reviews and offer consumers with a high end product and an affordable price point. Comparable products from Intel and Nvidia have typically been much more expensive. Meanwhile, AMD is making efforts to expand into new faster growing technologies, particularly virtual and augmented reality, and signing new partnerships to increase exposure. The company recently signed a deal with Alibaba to provides its Cloud services with AMD GPUs.
During the quarter, AMD also made the move to restructure its long term debt to more manageable levels. The initial equity dilution caused the stock to tank, but that quickly bounced back over the last month. By any estimation this is a long term move to prevent higher interest expenses in the future.
While AMD’s long term outlook appears to have improved, there still remains several short term risks. AMD is still well behind Nvidia and Intel in their respective markets and don’t have the market power to compete with them on a larger scale. Additionally, currency headwinds and weak PC sales will continue to pose a problem until a broader bounceback occurs.
Do you think AMD can beat estimates? There is still time to get your estimate in here!