To The Moon

$Advanced Micro Devices(AMD)$ will be reporting its fourth-quarter 2024 on 04 Feb 2024 after the market close.

We saw how AMD share price have lost 30.26% since its last earnings call on 29 Oct 2024, even though the sentiment given was positive.

The consensus EPS forecast for the fourth-quarter would be expected to come in at $1.08.

Advanced Micro Devices (AMD) Last Third Quarter Calls Positive Sentiment But Shares Fell Significantly

The third quarter earnings call highlighted strong performance in the Data Center and Client segments with record revenue and growth, alongside successful product launches. However, challenges were noted in the Gaming and Embedded segments, with significant year-over-year declines. Despite these challenges, the overall financial outlook remains positive.

This challenges might remain as these factors was highlighted in the previous (third) quarter earnings.

Gaming Segment Decline Expected To Continue In Fourth Quarter

Gaming segment revenue declined 69% year-over-year to $462 million due to decreased semi-custom sales as Microsoft and Sony reduced channel inventory. This would continue as consumers might be waiting for $NVIDIA(NVDA)$ new GPU chip to be in new gaming cards.

Embedded Segment Challenges Remains As Inventory Levels Normalize

Embedded segment revenue decreased 25% year-over-year to $927 million as customers continue to normalize inventory levels. Customers would have normalize their 2024 inventory before they do their budget planning moving into 2025.

Supply Chain Tightness

The supply environment remains tight, although improvements were made to meet demand for Instinct products. This could continue to post a challenges to AMD.

Advanced Micro Devices (AMD) Guidance To Look At

During AMD's Q3 2024 earnings call, the company provided guidance for the fourth quarter of 2024, expecting revenue to be approximately $7.5 billion, reflecting a 22% year-over-year increase. This growth is anticipated to be driven by strong performances in the Data Center and Client segments, more than offsetting declines in the Gaming and Embedded segments.

Third quarter revenue increased 18% year-over-year to a record $6.8 billion, driven by strong sales in Data Center and Client Processors. The demand for their data center and client processors should remain in demand, but for future orders, there might be a lower demand. Data Center segment revenue increased 122% year-over-year to a record $3.5 billion, driven by strong EPYC and Instinct product sales.

AMD aims to maintain a non-GAAP gross margin of about 54% in Q4, the same as Q3. Operating expenses are projected to be around $2.05 billion, with a non-GAAP effective tax rate of 13%. The company also highlighted a robust outlook for its Data Center GPU revenue, which is expected to exceed $5 billion for the year, driven by significant adoption of its MI300 series and expanding customer base.

Client segment revenue was $1.9 billion, up 29% year-over-year, driven by strong demand for Zen 5 Ryzen processors. Launch of next-gen MI-325X GPU and Ryzen AI Pro 300 Series processors, enhancing AI capabilities and customer adoption.

For Q4 2024, AMD expects revenue to be approximately $7.5 billion, up 22% year-over-year, driven by growth in Data Center and Client segments.

Technical Analysis - Inverse Head and Shoulder?

AMD has earnings coming up after the Tuesday session, there are some short-term price action to look at. I am expecting AMD to move roughly 8 to 10% to the upside if AMD continue to maintain the level at the same price.

If AMD move 8 to 10% post earnings, we could see it move right back into resistance, but do note that there is a nice inverse head and shoulder which normally signal a bullish upside movement coming. And there is an engulfing move which the bulls then need to create a new daily uptrend.

So if AMD were to come down 8 to 10% to the downside post earnings, we could see AMD go back into the massive area of support which it have not tested since October of 2023, that is almost a year and a half.

Investors have been exposed all sorts of names recently like Advanced Money Destroyer, this show that it is kind of out of favor as the sentiment is so poor. But we need to under that when the sentiment is at lows such as what we have seen with $Palantir Technologies Inc.(PLTR)$ and $SoFi Technologies Inc.(SOFI)$ , these stocks have show us that they are able to maintain the accelerating growth they have been giving.

The reason why sentiment is low is because investors are getting tired of having fake breakouts and downtrends.

Summary

I would think AMD could give us an earnings surprise as we have seen how AI developers are now able to use the open sourced LLM model, and what they need is a local machine learning machines, I have seen people going to the shops to look for laptop or desktop which was used for gaming to see if they can be used for machine learning.

Most of these devices are loaded at AMD chips, so I think that might give the client chips business segment a good revenue for the fourth quarter 2024.

Appreciate if you could share your thoughts in the comment section whether you think AMD could provide an earning surprise given that the consumer chips demand would be powering its revenue.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.