AMD’s second-quarter results top expectations, but outlook for third-quarter disappoints

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Advanced Micro Devices, Inc. ($NASDAQ:AMD) reported second-quarter results that topped expectations, but the company’s outlook for the third quarter was less rosy. AMD saw revenues surge 70% year-over-year to a record $6.6 billion in the second quarter, driven by strong demand for its products in the data center market.

However, AMD warned that third-quarter revenues would be flat to slightly down from the second quarter, as the company works through inventory issues. Despite the third-quarter warning, AMD remains well-positioned to capitalize on trends in the data center market. This should help AMD continue to grow its business and drive long-term earnings growth.

Market Reaction

On Wednesday, ADVANCED MICRO DEVICES stock opened at $98.4 and closed at $99.0, up by 3.7% from prior closing price of 95.5.

VI Analysis

Advanced Micro Devices (AMD) is a company that designs and produces microprocessors and other semiconductor products. The company’s fundamentals reflect its long term potential, and the fair value of its shares is around $97.1, calculated by VI Line. Now, AMD stock is traded at $99.0, a fair price that is overvalued by 2%.

Summary

Investors were pleased with Advanced Micro Devices’ (AMD) second-quarter results, which topped expectations, but the company’s outlook for the third quarter disappointed. AMD’s stock price rose 3.7% the day after the results were announced. For the third quarter, AMD expects revenue to be flat to up slightly from the second quarter. The company attributed the strong second-quarter results to strong demand for its new Ryzen and Radeon products. AMD said it is on track to launch new products in the second half of the year, including its new Vega GPUs and Naples server processors. Despite the strong second-quarter results, AMD’s guidance for the third quarter was below expectations, causing some investors to worry about the company’s ability to sustain its momentum.