AMD, NVIDIA and Intel set for tough earnings season, company says

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Chipmakers Intel Corporation, NVIDIA Corporation and Advanced Micro Devices, Inc (AMD) are set for a tough earnings season, according to a financial firm’s pre-earnings coverage. 2022 has been a tough year for the semiconductor industry as companies around the world have seen their profits decimated by slowing global demand for personal and business computing products. With the first earnings season of 2023 poised to grab headlines, KeyBanc Capital Markets believes the current quarter guidance will be the key metric to watch when deciphering the current state of the economy. semiconductor industry.

AMD, NVIDIA, and Intel likely to share low guidance for the current quarter

Earnings due later this month for Intel and AMD will show their performance for the fourth quarter of last year. They will follow a historic bloodbath for both companies, which has seen Wall Street analysts describe Intel’s results as ‘inexcusable,’ and AMD report a massive 40% drop in sales in its customer segment, but keep his growth story alive as it increased operating and free cash flow in a quarter where expenses had dried up everywhere.

As the first trading day of the week has settled in, AMD is leading the charge in semiconductors, with shares up more than 7%. Behind, NVIDIA, whose shares are up 5%, while Intel trails the NASDAQ 100 index with a 2% share price appreciation.

Looking at what lies ahead in earnings season, Keybanc is taking a muted approach. Slow digestion of graphics processing unit (GPU) inventory accumulation, continued weakness in the personal computing industry and a slowdown in cloud computing sales will hamper AMD’s earnings for the year, according to the company. the fourth quarter of 2022 and will also cast a gloomy picture of its forecast. for the first trimester.

However, at the same time, Keybanc is also optimistic about AMD’s outlook for the second half of this year. The company believes the personal computing industry will bottom out by the end of the second quarter, and AMD’s Genoa product line will prove crucial in stealing market share from its biggest rival Intel. Keybanc estimates that AMD can gain 30% market share in the data center market – a significant achievement – with detailed coverage available here. Going forward, Team Red’s fourth quarter 2022 results may line up with estimates alongside lower guidance for the first quarter.

Speaking of Intel, personal computing weaknesses and lower cloud computing spending will weaken its earnings outlook and Q1 guidance. For Intel, a slowdown in spending by tech giants such as Google, Amazon and Facebook, alongside a slower Chinese cloud sector, will lead to another slowdown for Team Blue and a March quarter that follows historical trends.

Finally, NVIDIA, whose RTX 4070 Ti GPU has performed relatively well given current inventory issues and a slowdown in consumer spending, may post slightly better results for its January quarter. However, a Chinese slowdown, this time for gaming products, will also hurt Team Green, as its expectations for $2.5 billion in revenue from its gaming division may still be pushed back to its July quarter. . NVIDIA Third quarter 2023 results were a bloodbath which saw the company post $1.5 billion in revenue, almost half of the year-ago quarter. However, those results still beat analysts’ estimates, which saw the shares rise in aftermarket trading. NVIDIA’s forecast for the next quarter will also be lower, but Keybanc believes the company will weather 2023 on a high as the RTX 40 series ramps up and channel partner inventory empties.

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