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AMD sales disappoint, stock rallies

Heidi Chung
Reporter

Advanced Micro Devices (AMD) reported better-than-expected earnings but sales came in light, and the company issued weak guidance for Q1. The chipmaker expects revenue for Q1 between $1.20 billion to $1.30 billion which was lower than analyst expectations of $1.47 billion.

Q4 sales for the chipmaker were lighter-than-expected at $1.42 billion. Analysts polled by Bloomberg were expecting revenue of $1.44 billion during the quarter.

The company reported earnings of 8 cents per share which was in-line with consensus estimates.

Shares jumped 4% in after-hours trade Tuesday. AMD shares rallied 80% in 2018 and was the best-performing stock in the S&P 500.

“In 2018 we delivered our second straight year of significant revenue growth, market share gains, expanded gross margin and improved profitability based on our high-performance products,” Lisa Su, AMD’s president & CEO said in a statement. “Despite near-term graphics headwinds, 2019 is shaping up to be another exciting year driven by the launch of our broadest and most competitive product portfolio ever.”

AMD’s stock took a beating after its last earnings report on October 24. Shares fell 15% after the company reported better-than-expected earnings but issued weak guidance for Q4. Management said that the chipmaker expected about $1.45 billion in sales during Q4 which was well below analysts’ expectations of $1.6 billion.

This comes on the heels of rival Nvidia’s stark revenue warning on Monday. Nvidia shares tanked as much as 17% after the chip giant warned of weaker-than-anticipated sales during Q4. Nvidia blamed a dip in demand for its chips for crypto-mining, heated trade tensions and the slowdown in China. Nvidia will report Q4 financial results on February 14 after the market close.

Semiconductor companies are heavily exposed to the Chinese market and are often looked to as a proxy for the overall health of the global economy. The Philadelphia Semiconductor Index (^SOX) has tumbled 15% from its March 13, 2018 high, while AMD has tanked 45% from the high it hit on September 13, 2018.

AMD’s earnings conference call is scheduled for 5:30 p.m. ET.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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