AMD shares rise 7% on upbeat earnings

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AMD shares rise 7% on upbeat earnings

Reuters-Shares of Advanced Micro Devices Inc increased nearly 7% on Wednesday after the U.S chipmaker's upbeat earnings showed that it was making up for a personal-computer slump due to gains in the lucrative data center market.

At least 11 analysts lifted their ratings on the stock, cheering results that defied the historic collapse seen at rival Intel Corp and stoked expectations for further gains in the server market this year.

Lisa Su-led AMD posted quarterly revenue that beat Wall Street targets, but its sales forecast for the three months to March 31 fell short of estimates by over $150 million.

Bernstein analysts said that the print came across much better on an absolute basis, compared to their larger competitor's report last week.

Intel seems to be affected in a much worse way. AMD's data center business revenue increased by 42% in the quarter, compared with the 33% decline in Intel's data center and artificial intelligence unit in the same period.

In recent months, the data center market has slowed due to lower spending from recession-wary businesses, but AMD's faster and smaller chips have allowed it to gain ground on Intel.

AMD can beat Intel in the data center space due to its leading design, said Lucas Keh, semiconductors analyst at Third Bridge.

J.P. Morgan pegged AMD's share gain at 5 to 7 percentage points to between 28% and 30% in the server market this year.

The company, which started under-shipping PC chips last year in response to declining processor demand, said sales at the business that includes its PC chip unit fell 51% in the quarter.

The first quarter should be the bottom for us in PCs and then grow from there into the second quarter and then into the second half, Su said.