What To Expect From AMD Q4 Earnings After Nvidia Lowered Guidance

Advanced Micro Devices (NASDAQ:AMD) stock tumbled 8% during regular trading hours Monday after fellow chip power Nvidia (NASDAQ:NVDA) lowered its quarterly guidance. So, let’s see what investors should expect from AMD’s Q4 earnings results that are due out after the market closes Tuesday.

Overview

Nvidia on Monday cut its quarterly revenue guidance by $500 million to $2.2 billion. Nvidia said its gaming and data-center segments underperformed expectations in the quarter. CEO Jensen Huang also cited “deteriorating macroeconomic conditions, particularly in China” as reasons for the company’s newly subdued quarterly guidance. Huang went on to call the quarter “a real punch in the gut” and “an extraordinary, unusually turbulent, and disappointing quarter,” in a letter to shareholders Monday.

NVDA’s guidance follows Apple (NASDAQ:AAPL) and others and seems to confirm that the Chinese economy is set to continue to slow. Shares of NVDA tumbled roughly 14% Monday, while Intel (NASDAQ:INTC) and Micron (NASDAQ:MU) slipped.

Q4 Outlook

AMD is coming off a relatively disappointing Q3. The firm’s revenues climbed 4% from the prior-year quarter but fell 6% sequentially to $1.65 billion, which missed Wall Street expectations. AMD also provided lower-than-expected Q4 guidance last quarter on the back of slowing GPU demand from cryptocurrency miners, which has also become an issue for NVDA amid the bitcoin downturn.

With that said, our current Zacks Consensus Estimate calls for AMD’s Q4 revenues to slip 2.68% to reach $1.44 billion. Plus, AMD’s Q1 fiscal 2019 revenues are projected to plummet 12.2% from the year-ago period.

Moving on, AMD’s adjusted quarterly earnings are expected to pop 12.5% to touch $0.09 per share. This might sound impressive, but it would mark a significant slowdown from Q3’s 44.4% bottom-line expansion. Meanwhile, Q1 2019’s EPS figure is projected to tumble over 27% from the year-ago period.

Bottom Line

AMD is currently a Zacks Rank #3 (Hold), and investors should remember that the chip business is historically cyclical. AMD said it will report its Q4 and fiscal year 2018 financial results after the closing bell on Tuesday.

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