AMD said its preliminary third quarter revenue will be about $5.6 billion, down 16% from its prior prediction of $6.7 billion, sending its stock over a cliff by more than 13% on Friday afternoon. By market close, shares were still down 8%.
Client revenue was weaker than hoped, while revenue for data center, gaming and embedded grew significantly year to year, in line with company expectations. Final results will be announced Nov. 1, the company said.
The lower client segment results came from reduced processor shipments due to a weaker than expected PC market and significant inventory corrections across the PC supply chain, CEO Lisa Su said in a statement.
Economists have been noting chip inventory corrections across much of the industry which are expected to last through much of 2023 after OEMs and contract manufacturers built up chip supplies in early 2022 following shortages in late 2020 and 2021. They will need time to absorb those surpluses in some segments, and will reduce purchases, resulting in lower chipmaker revenues.
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Other chipmakers suffered on Friday as well, including Intel (down 4%), Nvidia (down 8%), Texas Instruments (down 3%) and Micron (down 2%). The Philadelphia Semiconductor index was down 5%.