AMD's Q4 2024 Earnings: Mixed Outlook with Segment Weakness

AMD's upcoming fourth-quarter 2024 results show promise with revenue growth expectations yet highlight significant weaknesses in the Embedded and Gaming segments. Investors should closely watch these results for stock price impacts.

Date: 01-02-2025

AI Rating: 6

A positive outlook on revenue growth: AMD is anticipating fourth-quarter 2024 revenues of $7.5 billion, suggesting a year-over-year growth rate of 22%. This aligns closely with the Zacks Consensus Estimate, which suggests revenues of $7.52 billion and a growth of 21.84%. Such revenue growth is a strong indicator for potential positive stock price movements, especially given the history of AMD beating earnings estimates in three of the last four quarters.

Strong performance in Data Center revenues: AMD predicts that Data Center segment revenues will experience significant growth, with an expected surge to $4.1 billion, indicating year-over-year growth of approximately 79.71%. This indicates strong demand for AMD's data center chips, particularly for AI applications. Such a substantial increase is likely to be viewed positively by investors, as it highlights AMD's competitive edge in current technology trends.

Client segment growth also optimistic: The Client segment is expected to generate revenues of $1.97 billion, reflecting a year-over-year gain of 35.04%. This further indicates AMD's ability to maintain demand for its processors amidst stiff competition.

Concerns over Embedded and Gaming segment declines: In contrast to the positive projections, AMD faces challenges with expected declines in its Embedded and Gaming segments. The Embedded revenues are expected at $922 million (-12.77% year-over-year), and Gaming revenues are projected to drop to $509 million (-62.79% year-over-year). These weaknesses may dampen investor sentiment, showing that while certain segments are thriving, others are underperforming drastically.

Stock performance context: Over the past year, AMD underperformed relative to the broader technology sector and its specific industry, losing 31.2% compared to sector gains of 25.2%. The current temperature of the stock market regarding AMD shows a general bearish trend, with the stock trading below critical moving averages and receiving a Zacks Rank #4 (Sell).

Conclusion: While AMD's revenue growth and performance in the Data Center and Client segments show promise, the significant weaknesses in Embedded and Gaming may overshadow the overall outlook. The balance between these mixed results may guide investor strategies moving forward.

Stocks: AMD META NET