Advanced Micro Devices Inc. (AMD)

Advanced Micro Devices Inc. (AMD) stock fell by 2.54% due to the company's Q1 2024 guidance falling short of Wall Street expectations, despite of surpassing q4 earning results.

• Q4 2023 Performance: AMD's results for Q4 2023 were in line with projections, with revenue slightly exceeding estimates and earnings meeting expectations. Revenue surged to $6.17 billion, marking a substantial 10% YoY increase. Operating Income notably improved from a negative $149 million to a positive $342 million. Net Income soared to $667 million, representing a staggering 3,076% YoY growth. Earnings Per Share (EPS) increased from $0.01 to $0.41, a remarkable 4,000% rise.
• Segment Performance: Notable performances include strong growth in the data center segment, robust client segment growth, a decline in gaming due to reduced console revenue, and lower revenue in the embedded segment.
• Q1 2024 Guidance: AMD expects modest 1% year-over-year revenue growth in Q1 2024, falling below Wall Street's 7% growth projection. The company also forecasts a 52% adjusted gross margin.
• Data Center GPU Outlook: CEO Lisa Su raised expectations for data center GPU revenue, anticipating sequential growth and exceeding $3.5 billion in 2024, driven by strong customer engagement and expanded partnerships.

Advanced Micro Devices Inc. (AMD) stock dropped by 5.99% due to the news that ASML had decided to halt shipments of its lithography machines used in semiconductor fabrication to China. The rationale behind ASML's decision was the pressure exerted by the U.S. government.

• ASML's Influence on the Semiconductor Industry: ASML's action had significant repercussions within the semiconductor industry, causing concerns and market reactions. The decision to halt shipments of crucial equipment to China, a key player in the semiconductor manufacturing landscape, sent shockwaves through the tech sector.
• Tech Stocks Hit by Analyst Downgrade: In addition to the broader semiconductor industry news, the tech sector faced further challenges as Barclays analyst Tim Long downgraded the investment company's rating on Apple stock. The rating was lowered from Neutral to Underweight, with a corresponding reduction in the one-year price target on Apple shares from $161 per share to $160 per share.
• Factors Behind Apple's Downgrade: The downgrade of Apple's stock was driven by several factors. Tim Long cited a less favorable outlook for the iPhone product line, suggesting potential weakness in sales or market performance. Additionally, concerns were raised about the company's services business, further contributing to the revised rating and price target.

Shares of Advance Micro Devices (AMD) dropped by 5.52% from $101.67 to $96.06 in the trading on Wednesday, October 25, 2023. The reasons why AMD stock down today include:

• Analyst Notes: Analysts issued negative notes specifically on AMD ahead of its earnings report, expecting "muted" upside for the company. They anticipated that AMD would report in line with expectations but might guide Q4 in line to modestly below consensus due to challenges in its embedded (Xilinx) and console sales.
• iPhone Sales Concerns: Another analyst note raised concerns about tepid sales of the new iPhone, which would impact iPhone suppliers, including Qualcomm and Broadcom.
• Texas Instruments' Guidance: Texas Instruments, a semiconductor industry bellwether, issued fairly negative guidance in its earnings release, showing a 14% decline in revenue year over year and forecasting a high-single-digit quarter-over-quarter decline in the current quarter.
• Self-Driving Car Incident: California suspended the license for self-driving car company Cruise, owned by General Motors, after an accident involving an autonomous vehicle. This cast a shadow over the smart vehicles and Internet of Things (IoT) technology sectors, affecting Qualcomm and others.
• Rising Treasury Yields: Long-term Treasury yields were rising on that day, adding to the negative sentiment in the chip sector. Overall, these factors contributed to the sharp decline in AMD's stock price and negative sentiment surrounding chip stocks in general.