Signs of AMD are seen at the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai, China July 30, 2021. REUTERS/Aly Song GLOBAL BUSINESS WEEK AHEADRegister now for FREE unlimited access to Reuters.comAug 2 (Reuters) - Advanced Micro Devices Inc (AMD.O) on Tuesday forecast third-quarter revenue slightly below Wall Street estimates, a signal of uncertainty that concerned some investors after the company stock made huge gains in July.AMD continued to show strong growth in the data center business, at the expense of its rival Intel, but the company cut its market forecast for personal computer sales and shares fell more than 5% after hours."After the surprisingly challenging quarter that Intel had, a lot of eyes were closely watching to see what AMD did and, overall, the numbers were solid," said Bob O'Donnell, chief analyst at TECHnalysis Research. "The issue is the market was looking for a better forecast, but it’s clear that the company sees a challenging market going forward.”Register now for FREE unlimited access to Reuters.comRunaway inflation and the reopening of offices and schools have led people to spend less on personal computers (PCs) than they did during lockdowns, hurting companies like AMD, which is among the largest suppliers of central processing units and graphics processing units chipsets.Chipmakers also are under pressure from a spate of COVID curbs in China, an important PC market, and the Ukraine war, which have worsened supply-chain snarls and dragged demand further. Global shipments of PCs are expected to drop 9.5% this year, according to IT research firm Gartner. read more Those pressures led to lower-than-expected earnings and forecasts from Intel Corp (INTC.O) last week. Analysts had worried that Intel's sales from Datacenter and AI Group (DCAI) falling 16% last quarter could also spell out a slowdown in the cloud business which has been booming. read more But AMD Chief Executive Officer Lisa Su told analysts on earnings calls that in her interactions with customers, the cloud business continued to be strong. "We're continuing to ramp new cloud instances ... we see that continuing into the second half of the year."Su said AMD continued to gain market share in the data center business.YipitData research director Nathaniel Harmon said AMD has been gaining market share in the data center and cloud market at Intel’s expense, while Intel has been losing 1-2 percentage points of share each quarter since the first quarter of 2019.Still, AMD is coping with a slowing PC market. Su told analysts that AMD revised its outlook on the PC market for this year to drop by the mid-teens percent from previous projections of a high single digit percent drop. Su said AMD was focusing on the higher end PC market.The company expects revenue of $6.7 billion, plus or minus $200 million, for the current quarter compared to analysts' estimate of $6.82 billion, according to IBES data from Refinitiv.AMD expanded its full-year forecast to a range of $26 billion to $26.6 billion, compared to about $26.3 billion earlier. Analysts had forecast $26.18 billion.Second-quarter revenue jumped 70% to $6.55 billion, inching past analysts' estimate of $6.53 billion.Adjusted earnings for the second quarter were $1.05 per share, topping analysts' estimates by 2 cents.Register now for FREE unlimited access to Reuters.comReporting by Yuvraj Malik in Bengaluru; Editing by Maju Samuel, Bill Berkrot and Chris ReeseOur Standards: The Thomson Reuters Trust Principles.
AMD posts Q3 sales outlook below Wall St, data center growth remains strong.