What happened
Shares of Advanced Micro Devices (NASDAQ: AMD) climbed 14% this past week, according to data from S&P Global Market Intelligence. Encouraging signs that the semiconductor industry's slump could be nearing its end and more evidence of AMD's market share gains drove investors to bid up the price of the popular tech stock.
So what
AMD's shareholders breathed sighs of relief when the chipmaker released its fourth-quarter earnings report after the market close on Tuesday. Going into the week, investors were fearful that AMD's results could mimic those of Intel(NASDAQ: INTC). The chip giant reported dismal declines in sales and profits late last month. Intel also warned of more hard times ahead for semiconductor producers.
AMD, however, fared much better than its archnemesis. AMD's revenue jumped 16% year over year to $5.6 billion, bolstered by strong growth in its data center business. AMD's acquisition of adaptive computing leader Xilinx also contributed to its growth.
AMD's data center revenue surged 42% to $1.7 billion, fueled by sales of its high-performance EPYC processors. Intel's data center and AI segment revenue, meanwhile, plunged 33% to $4.3 billion. Intel is clearly taking share from its larger rival in this key market -- a trend that AMD CEO Lisa Su expects to continue in the coming year.
Better still, AMD's purchase of Xilinx provided it with a leading portfolio of adaptive computing products, which users can reconfigure to optimize performance for their particular needs. AMD reports revenue for these products in its embedded segment, which saw sales grow to $1.4 billion in the fourth quarter.
Now what
Looking ahead, Su expects the downturn in the personal computer (PC) market, which has weighed on the chipmaker's results, to begin to abate in the second quarter of 2023. "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.
A rebound in the PC market and continued growth in AMD's data center and embedded segments could drive more gains for investors in the weeks and months ahead.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short January 2025 $45 puts on Intel. The Motley Fool has a disclosure policy.
