As AMD prepares to release its earnings report, all eyes are on one key metric that could significantly impact its stock performance. While traditional earnings figures are essential, the focus for investors and analysts will be on AMD’s forecast for its MI300 artificial intelligence (AI) accelerator.
Why the MI300 Forecast Matters
The most critical number in AMD’s upcoming earnings report isn’t a standard financial figure but rather the company’s revenue forecast for its MI300 AI accelerator. This forecast will provide insight into AMD’s future growth potential and overall business health.
Impact of MI300 Forecast on AMD Shares
Cantor Fitzgerald’s C.J. Muse highlights the significance of this forecast. AMD’s previous outlook for MI300 revenue was upwards of $4 billion. If AMD can raise this estimate to $5 billion or more, it would likely be a positive sign for its stock. Conversely, if AMD fails to meet or raise its forecast, the stock could face further declines.
- Current Sentiment: AMD shares have dropped over 20% in the last two weeks.
- Investor Focus: Wall Street will be closely monitoring potential order cuts from Microsoft, which could influence AMD’s revenue expectations for the MI300.
Analysts’ Perspectives on AMD’s MI300 Guidance
There’s a spectrum of opinions among analysts regarding AMD’s MI300 revenue forecast for 2024. Here’s a breakdown of what different experts are saying:
1. Cantor Fitzgerald’s C.J. Muse
Muse underscores that if AMD’s MI300 revenue forecast stays at $4 billion, there could be downside risk for the stock. However, a boost to $5 billion or more would be a positive signal.
- Key Insight: A forecast of $5 billion-plus could enhance investor confidence.
2. Susquehanna’s Christopher Rolland
Rolland notes the impact of recent order cuts, suggesting a cautious outlook. He expects an additional $500 million in revenue, potentially reaching $5 billion for 2024.
- Key Insight: A $500 million increase might not fully satisfy investors, but it would indicate a solid upward trend.
3. Wedbush’s Matt Bryson
Bryson reflects on the possibility of reaching $6 billion in MI300 shipments. However, recent challenges could pressure this forecast, making $4.5 billion a potentially more realistic figure.
- Key Insight: Even a modest increase to $4.5 billion could provide a positive boost if accompanied by solid performance in other market areas.
Financial Metrics to Watch
While the MI300 forecast is crucial, traditional financial metrics will also be under scrutiny. Here’s what to expect from AMD’s earnings report:
- Earnings Per Share (EPS): Analysts expect AMD to report 68 cents in adjusted EPS, up from 58 cents in the previous year.
- Total Revenue: Forecasts suggest $5.72 billion in revenue, compared to $5.36 billion a year prior.
Segment Breakdown
Here’s a closer look at the expected performance across AMD’s key business segments:
- Data-Center Revenue: Projected to grow to $2.77 billion from $1.32 billion.
- Client Revenue: Expected to rise to $1.44 billion from $998 million.
- Gaming Revenue: Anticipated to decline to $655 million from $1.58 billion.
- Embedded Revenue: Forecasted to fall to $850 million from $1.46 billion.
Market and Sector Insights
Analysts are also providing context for AMD’s performance within broader market trends:
- PC and Server Markets: The PC market appears stable, and the server market shows signs of recovery.
- Gaming and Embedded Segments: Gaming revenue is expected to recover in the second half of the year, while embedded revenue may see a gradual recovery.
Final Thoughts
As AMD’s earnings report approaches, the forecast for the MI300 AI accelerator will be the primary focus. This metric will not only reflect AMD’s potential for future growth but also its ability to navigate current market challenges. Investors should closely monitor this forecast, alongside traditional financial metrics, to gauge AMD’s stock performance and future prospects.
