Well it’s official, if you thought AMD was the rising upcomer that continues to give Nvidia a run for its money, think again - because, on Wall Street they’ll forever be the “Great Value” Nvidia. In short, the chipmaker that’s been more disappointing than a Brent Venables led football program, dropped Q3 results that would be considered "fine" for most companies. But when you’re playing in the same league as Nvidia and Broadcom, "fine" just doesn’t fly in 2024.

The shocking part? AMD met expectations on the top line and beat on the bottom LOL. The problem though is that AMD’s Q4 guidance is expected to be roughly in line with what analysts expected (yawn), and investors responded by yeeting the stock into the abyss. Shares absolutely plummeted 7.6% in after-hours trading, proving once again that in the chip game, “good enough” is never enough.

(Source: CNBC) 

Now again, the good part for the company financially, was that EPS came in at 92 cents adjusted (exactly as expected), while revenue reported was $6.82 billion (slightly better than the $6.71 billion expected). Not bad,  but not enough to impress a market that’s been spoiled by Nvidia’s AI-fueled dominance.

But, but, but… to be fair, when looking at the grand scheme of things, AMD’s made a load of progress this quarter. AMD’s data center business doubled in sales for the second quarter in a row, largely driven by its AI-focused Instinct GPUs. In fact, AMD claims it’ll rake in $5 billion from AI chip sales this year, up from the previously forecasted $4.5 billion. For instance, CEO Lisa Su even said that customer demand for their new MI325X AI chips is sky-high.

(Source: Motley Fool) 

AMD’s data center segment is also popping off (up 122% year over year). On the other hand, though, AMD’s gaming division is going about as well as your friend who invested in Dogecoin at the top—sales were down a whopping 68% year over year. The culprit? A drop in “semi-custom revenue,” which sounds fancy but just means fewer chips for gaming consoles like the PlayStation 5. 

AMD’s embedded business isn’t faring much better, with sales down 25% annually. This segment includes lower-cost chips for industrial use, and it looks like those industries just aren’t in a spending mood right now.

(Source: Giphy) 

With that said though, AMD’s PC segment grew 23% during the quarter to $1.9 billion, thanks in part to their chips being featured in Microsoft’s AI-powered laptops. Plus, the company’s gross margin expanded to 54%, helped along by that sweet data center revenue.

Oh and let’s not forget, AMD’s stock has still managed to climb 12.85% in 2024. But compared to Nvidia and Broadcom, which are riding the AI wave to the friggin 'moon, AMD’s gains are like showing up to the party with a six-pack of off-brand beer. You’re there, but no one’s really impressed.

Which again, is why despite the AI talk and positive comments, the fact that overall revenue guidance for Q4 is still just in line with expectations, was enough to send investors packing. Turns out, when your biggest rival (Nvidia) is crushing it with AI chips, “in line” just feels like AMDs reliable cash cows have suddenly gone lactose intolerant. 

(Source: Giphy) 

In the end, AMD’s Q3 wasn’t bad, but it wasn’t exactly awe-inspiring either. In a world where Nvidia is printing money with AI chips and Broadcom is crushing it, AMD’s just ok results and so-so guidance aren’t cutting it with investors. 

The bright side? Well, if you’re looking for a big tech play that’s got potential but isn’t quite hitting it out of the park like Nvidia, AMD might just be your guy. Just don’t expect it to blow your socks off anytime soon. In the meantime, do what you will with this information and as always stay safe and stay frosty, friends! Until next time… 

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Stocks.News holds positions in Microsoft as mentioned in the article.