Advanced Micro Devices (AMD) revealed its fourth-quarter 2023 non-GAAP earnings of 77 cents per share, in line with the Zacks Consensus Estimate, reflecting a robust 11.6% jump year over year. The company also saw a 10.2% year-over-year revenue increase, surpassing expectations.
The Revenue Breakdown
Data Center revenues experienced a significant surge, accounting for 37% of the total revenues, while the Client segment witnessed a remarkable 61.8% year-over-year revenue increase. However, the Gaming segment faced a decline of 16.8% in revenues, and the Embedded segment’s revenues were down by 24.3% year over year.
Operational Performance
AMD’s non-GAAP gross margin contracted by 30 basis points year over year to 50.8%, primarily due to lower Embedded segment revenues. Additionally, non-GAAP operating expenses increased by 7.8% year over year to $1.73 billion.
Financial Review
AMD ended the fourth quarter with cash and cash equivalents of $5.77 billion, and total debt was reported at $2.47 billion. The operating cash flow for the quarter was $381 million, leading to free cash flow of $242 million.
Forward Guidance
AMD expects first-quarter 2024 revenues to be $5.4 billion and anticipates a mixed demand environment, with growth in the Data Center and Client segments offset by declines in the Embedded and Gaming segments.
Stock Analysis & Recommendations
Currently holding a Zacks Rank #3 (Hold), AMD is viewed favorably. Another stock to watch in the Computer & Technology sector is Silicon Motion Technology (SIMO), which currently has a Zacks Rank #1 (Strong Buy).