Chip designers AMD, NVIDIA, Intel at risk of weak guidance for Q1.
Chip designers Intel Corporation, NVIDIA Corporation and Advanced Micro Devices, Inc (AMD) are likely to have a weak earnings season, according to pre-earnings coverage from a financial firm. This is due to a slowing global demand for personal and enterprise computing products in 2022. KeyBanc Capital Markets believes that guidance for the current quarter will be the key metric to watch when it comes to deciphering the current state of the semiconductor industry.
AMD is leading the charge in the semiconductor space, with its shares up by more than 7%. NVIDIA shares are up by 5%, while Intel is following the NASDAQ 100 index with a 2% share price appreciation. Keybanc is taking a muted approach, as slow digestion of graphics processing unit (GPU) inventory buildup, continuing weakness in the personal computing industry and a slowdown in cloud computing sales will hamper AMD’s earnings for the fourth quarter of 2022 and cast a dim picture on its guidance for the first quarter.
Intel is also likely to suffer due to weaknesses in personal computing and lower cloud computing spending. NVIDIA, whose RTX 4070 Ti GPU has been performing relatively well, may post slightly higher results for its January quarter. However, a Chinese slowdown, this time for gaming products, will also hurt Team Green. NVIDIA’s guidance for the next quarter will also be lower, but Keybanc believes the firm will pull through 2023 on a strong note as the RTX 40 series ramps up and channel partner inventory clears out.
Overall, the semiconductor industry is facing a challenging 2021, with Intel, NVIDIA and AMD all likely to suffer from weak guidance for the current quarter. Keybanc is taking a cautious approach, but believes that AMD can gain a 30% market share in the data center market and that NVIDIA will pull through 2023 on a strong note. It is likely that the personal computing sector will bottom out by the end of the second quarter, and investors should watch the upcoming earnings season for more details.
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