AMD shares fall on lower quarterly revenue forecast

Advanced Micro Devices Inc.'s shares fell in the extended session Thursday after the chip maker cut its already conservative forecast due to a drop in PC sales after two years of epidemic-driven sales.

AMD AMD shares fell by as much as 4% after a 0.1% decline in the regular session to close at $67.85.

The company forecast revenue of $5.6 billion with an adjusted gross margin of 50% in the third quarter. The PC market weakened significantly in the quarter, said Lisa Su, AMD's chair and chief executive. While our product portfolio remains strong, macroeconomic conditions led to a lower than expected PC demand and a significant inventory correction across the PC supply chain. AMD expects to lose 40% of client sales to around $1 billion, compared to Wall Street's consensus estimate of $2.04 billion. In early August, AMD held firm on its revenue forecast of $26 billion to $26.6 billion for the year, and projected third quarter revenue of $6.5 billion to $6.9 billion, which was less than Wall Street consensus and gross margins of 54% at the time. Analysts polled by FactSet said third-quarter revenue of $6.71 billion and annual sales of $26.13 billion are currently forecast by FactSet. AMD is expected to report quarterly earnings on November 1. AMD said that the gross-margin shortfall to expectations was due to lower revenue driven by lower client processor unit shipments and average selling price. The third quarter's results are expected to include approximately $160 million of charges primarily for inventory, pricing and related reserves in the graphics and client businesses. Last week, after Micron Technology Inc. reported an unprecedented oversupply problem, analysts debated whether this supply glut was worse than the one in 2019 that the industry tried to avoid after two-years of COVID- 19 related demand and supply-chain difficulties.