AMD Inks Multi-Year Agreement With Samsung for Radeon Chips
Advanced Micro Devices AMD and Samsung announced an extended agreement, under which, AMD will supply its Radeon graphics chips to the latter’s Exynos SoCs. The deal will help Samsung bring console-level graphics quality and optimized power consumption to its upcoming mobile devices.
AMD-Samsung’s partnership dates back to 2019, which resulted in the Exynos 2200 SoC, built on Samsung’s custom Xclipse GPU based on the AMD RDNA2 architecture. Xclipse featured hardware-accelerated ray tracing and variable rate shading features for console-like gameplay on mobile devices.
AMD’s Prospects Ride on Partner Base, Strong Portfolio
AMD is riding on an expanding partner base and strong demand for EPYC, Radeon and Ryzen processors. Moreover, acquisitions, including Xilinx and Pensando, have diversified its business.
AMD shares have gained 42.9%, outperforming the Zacks Computer and Technology sector’s return of 18.8%. It has also outperformed its closest peer Intel INTC but lagged NVIDIA NVDA.
Shares of Intel and NVIDIA have gained 24.2% and 83.9%, respectively.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
AMD is benefiting from strong demand for EPYC processors, which currently power more than 600 publicly available instances globally, following the launches of AMD-based instances from partners like AWS and Microsoft in the fourth quarter of 2022.
AMD currently powers more than 100 of the world's fastest supercomputers and 15 of the top 20 most energy-efficient supercomputers in the world. In the enterprise segment, more than 140 fourth-gen EPYC platforms were in development from HPE, Dell, Lenovo, Super Micro and other partners at the end of the fourth quarter.
AMD’s Guidance Not So Encouraging
AMD expects first-quarter 2023 revenues of $5.3 billion (+/-$300 million), which indicates a year-over-year decline of 10%.
The company expects to witness growth in the Embedded and Data Center segments, partially offset by a decline in the Client and Gaming segment.
Sequentially, the Embedded segment's revenues are expected to increase. The Client and Gaming segment's revenues are expected to decline, largely consistent with seasonality. Data Center revenues are expected to decline due to elevated levels of inventory with some cloud customers.
The Zacks Consensus Estimate for first-quarter 2023 earnings is pegged at 56 cents per share, unchanged over the past 30 days. The consensus mark for revenues stands at $5.30 billion, indicating a year-over-year decline of 9.89%.
For 2023, AMD expects Embedded and Data Center revenues to grow year over year due to a strong portfolio. Moreover, it expects the Client and the Gaming segment's revenues to decline on the current demand environment.
Zacks Rank & Stock to Consider
AMD currently has a Zacks Rank #4 (Sell).
Intel and NVIDIA currently carry a Zacks Rank #3 (Hold).
STMicroelectronics STM, with a Zacks Rank #2 (Buy), is a better-ranked stock in the broader sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for the company's first-quarter 2023 earnings is pegged at 96 cents, unchanged over the past 30 days.
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