Chip giant AMD (AMD) will announce its first quarter earnings after the bell on Tuesday. The announcement follows the disappointing report from competitor Intel last week. While Intel (INTC) posted a profit at both highs and lows, the company gave lower-than-expected revenue guidance for the current quarter, sending shares lower.
Investors and analysts will be looking at two key metrics during AMD's report: AI chip sales and PC market performance. The company released its MI300 line of AI accelerators in December 2023 and started shipping units shortly after. How well these chips sell could have a major impact on AMD's stock after the earnings release.
Wall Street expects earnings per share (EPS) of $0.61 on revenue of $5.45 billion. That would mark a slight increase from the same quarter last year, when AMD reported earnings per share of $0.60 on revenue of $5.35 billion.
AMD's MI300 chips are intended to compete with Nvidia's (NVDA) best-selling H100 line of accelerators. The company previously said its MI300X beats Nvidia's chips, a claim Nvidia rejected. Intel is also chasing Nvidia's H100 platform with its Gaudi 3 accelerators.
However, Nvidia announced the successor to the H100, the Blackwell platform, during the GTC conference in March. This platform should offer better performance than its predecessor.
The AI arms race isn't slowing down anytime soon either. Microsoft (MSFT), Google (GOOG, GOOGL) and Meta (META) have each announced they are pouring money into AI data center capabilities to build out and support their various software offerings.
But whether AMD can take a significant market share from market leader Nvidia remains to be seen. According to UBS Global Research analyst Timothy Arcuri, sales of MI300X should generate billions this year.
“We continue to see MI300's revenue this year still conservatively in the $5-$6 billion range and we also see expectations are excellent,” he wrote in an investor note ahead of the earnings results.
For the quarter, Wall Street expects data center revenue of $2.31 billion, representing a 78% year-over-year increase from the same period last year.
Beyond AI sales, Wall Street will be looking at the recovery in the PC market and its impact on AMD's sales. According to IDCGlobal PC sales grew 1.5% in the first quarter of 2024, marking the first quarter of growth after two years of declines.
Intel already reported a 31% year-over-year increase in revenue from Client Group, the company's PC chip segment, in the latest quarter. That should be good for AMD. Both companies are pushing their own AI PCs, or laptops and desktops that can run generative AI apps locally instead of over the internet.
Analysts are calling for AMD Client revenue, the segment that includes PC chip sales, to rise 74% year over year to $1.29 billion in the quarter.
But Intel and AMD aren't the only companies pushing for a share of the AI PC market. Qualcomm (QCOM) is aiming for its own cut with its new Snapdragon X Elite and Snapdragon X Plus chips for laptops.
Despite healthy growth expectations for the Data Center and Client segments, Wall Street expects the company's Gaming and Embedded divisions to decline 45% and 40%, respectively.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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