Is AMD Set for Q2 Rally? What To Expect From Earnings And Beyond

Advanced Micro Devices (NASDAQ:AMD), the renowned semiconductor company, is poised to release its second-quarter financials for fiscal year 2024 on 30th July (after market close), with markets eagerly awaiting the results. With AMD stock price down more than 1/3rd from the ATHs set a few months ago, the question remains about whether this a time to reconsider getting in on the dip.

Before looking outwards to the future, the immediate term results will be first on the agenda as a catalyst. Preliminary reports suggest that AMD is set to report revenues of approximately $5.72 billion, marking a significant 7% growth from the same period last year. This is also a marked increase from $5.47bn delivered in the previous quarter, but remains down on the final quarter of 2023, when revenues were above $6bn.

Earnings per share for the quarter are also projected to impress, anticipated to hit around $0.68, up from the $0.62 reported in the previous period. This figure not only surpasses consensus estimates but also represents a robust 17% increase year-over-year.

Reporting Period	EPS Expected	EPS Actuals	Revenue Expected ($bn)	Revenue Actuals ($bn)
Q2 2024	0.68	–	$5.72	–
Q1 2024	0.61	0.62	$5.45	$5.47
Q4 2023	0.77	0.77	$6.14	$6.17
Q3 2023	0.68	0.70	$5.69	$5.80

Such promising figures are buoyed by sustained sales in AMD's CPU segment, particularly the commendable performance of the AMD Ryzen 8000 Series processors, which cater to the client sector. In the larger context, global PC shipments have experienced a 3.1% uptick over the year, an encouraging signal for the chip giant's bottom line.

In the cutthroat server chip market, AMD is reportedly seizing market share from its longstanding rival, Intel. The key catalyst behind this shift is attributed to Intel's lag in transitioning to smaller process nodes, a move that has given AMD an edge, with its fourth generation AMD EPYC CPUs gaining traction.

Another critical driver of growth for AMD is the expanding GPU market segment. As the demand for powerful graphics processing capabilities escalates, particularly for AI-related tasks, AMD's GPU sales trajectory looks promising. The company's strategic move to launch innovative products like the MI300X chip for AI applications exemplifies its ambition to capture a broader swath of the burgeoning AI-related chip market. Sales for such cutting-edge products are forecasted to triumph over the previously guided benchmark of $3.5 billion for the year 2024.

Looking at AMD's stock performance, investors have witnessed a 65% valuation swell from early 2021, with current figures hovering around $150. Despite trading at a high valuation multiple of approximately 44x consensus 2024 earnings, the stock's price is predicted to climb further, targeting an approximate value of $163 per share—a potential 8% surge from its existing market price.

Investors and analysts alike remain attentive to AMD's progress, as its financial report will shed light on the company's ability to maintain its robust performance amidst fierce competition and an evolving technological landscape. With strong CPU sales and innovative strides in the AI chip domain, AMD is earmarked by many as a company to watch as it continues its upward trajectory.