AMD shares fall more than 13% on weak outlook, dragging chipmakers down

AMD's third quarter cut was deeper than the market expected, says Bernstein's Stacy Rasgon



Lisa Su, president and chief executive officer of Advanced Micro Devices (AMD), holds a 3rd generation Ryzen desktop processor while speaking during a keynote session at the 2019 Consumer Electronics Show (CES) in Las Vegas, Jan. 9, 2019.

David Paul Morris | Bloomberg | Getty Images

AMD shares were down 13.9% on Friday as investors digest the company’s disappointing preliminary third-quarter results Thursday that were well below its initial guidance.

The chipmaker cut its sales forecast on Thursday for the third quarter, blaming a larger-than-expected decline in the personal computer market and supply chain issues.

AMD now expects preliminary quarterly revenue of about $5.6 billion thanks to “reduced processor shipments.” That’s more than $1 billion below the $6.7 billion it had previously forecast as the midpoint of its revenue expectations for the quarter.

The company also said its non-GAAP gross margin is expected to come in around 50%, while it had previously expected gross margin to be closer to 54%.

Several firms, including Piper Sandler, Stifel, KeyBanc Capital Markets and Mizuho Securities cut their price targets for AMD in notes to clients Friday, though each of those maintained a buy or overweight rating.

Shares of other chipmakers like Intel and Nvidia were also down, more than 5% and 8%, respectively, as weak PC demand and supply chain issues could weigh on other semiconductor players.

WATCH: AMD’s third quarter cut was deeper than the market expected, says Bernstein’s Stacy Rasgon

AMD's third quarter cut was deeper than the market expected, says Bernstein's Stacy Rasgon



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