Advanced Micro Devices (AMD) Beats Q4 Earnings and Revenue Estimates

Advanced Micro Devices (AMD) came out with quarterly earnings of $0.69 per share, beating the Zacks Consensus Estimate of $0.66 per share. For comparison, a year earlier earnings per share were $0.92. These numbers have been adjusted for one-off items.

This quarterly report presented an earnings surprise of 4.55%. A quarter ago, it was expected that this chipmaker would post earnings of $0.67 per share when it actually produced earnings of $0.67, which was no surprise.

The company has topped consensus EPS estimates three times over the last four quarters.

Advanced Micro, which belongs to the Zacks Electronics – Semiconductors industry, posted revenues of $5.6 billion for the quarter ended December 2022, surpassing the Zacks Consensus Estimate by 1.58%. For comparison, year-ago revenues were $4.83 billion. The company has topped consensus revenue estimates three times over the last four quarters.

The sustainability of the immediate share price movement based on the recently-released numbers and future earnings expectations will largely depend on management’s commentary on the earnings call.

Advanced Micro shares are up about 11.9% year-to-date compared to the S&P 500’s gain of 4.6%.

What’s next for Advanced Micro?

While Advanced Micro has outperformed the market this year, the question that comes to investors’ minds is: what’s next for the stock?

There are no simple answers to this key question, but one reliable measure that can help investors address this issue is the company’s earnings prospects. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Prior to earnings release, the estimate revision trend for Advanced Micro is unfavorable. While the magnitude and direction of estimate revisions may change following the company’s just-released earnings report, the current status translates into the stock’s Zacks Rank #4 (Sell). Therefore, it can be expected that the company’s shares will underperform the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the next quarters and the current fiscal year change in the coming days. The current consensus EPS estimate is $0.69 on $5.57 billion in revenues for the coming quarter and $3.45 on $24.41 billion in revenues for the current fiscal year.

Investors should be aware that the outlook for the industry may also have a significant impact on share prices. In terms of the Zacks Industry Rank, the Electronics & Semiconductors industry is currently in the bottom 37% of the 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another company in the same industry, nLight (LASR), has not yet released results for the quarter ending December 2022. The results are expected to be released on February 23.

The laser maker is expected to report a quarterly loss of $0.15 per share in its upcoming report, representing a year-over-year change of -1,400%. The consensus EPS estimate for the quarter has not changed over the last 30 days.

nLight’s revenue is expected to be $56.67 million, down 16% from the year-ago quarter.

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