AMD earnings preview: The race to catch Nvidia is on

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AMD (AMD) is looking for a power up as it reports third quarter earnings Tuesday after the bell.

Amid the AI boom, the chipmaker is playing catch up with Nvidia (NVDA), which currently rules the roost in AI chips. Recently, AMD CEO Dr. Lisa Su made the case that the field in AI is more wide open than it might appear right now — an idea AMD seems to be betting on.

“I’m not a believer in moats when the market is moving as fast as this,” Su told the audience at the 2023 Code Conference. “When you think about moats, … [they are in] markets where people are not really wanting to change things a lot.”

AMD’s newest datacenter chip, the MI300, will help the company gain on their competition. “AMD is particularly well-positioned to thrive in [second half of 2024] as its AI revenues ramp at the same time,” wrote Wedbush’s Matt Bryson, who rates the stock Outperform, on Oct. 25.

Bryson added that, though there may be uncertainty around near term results, he sees a “more positive outlook for AMD moving though 2024 into 2025.”

TD Cowen’s Matthew Ramsay, writing on Oct. 16, noted that, while this might be a “choppy” earnings season for AMD and competitors like Broadcom (AVGO) and Marvell (MRVL), these companies are set up for strong growth by the end of 2024 and into 2025.

“We continue to emphasize that the vast majority of these semis franchises… are high-quality, high-margin businesses and long-term secular trends remain quite positive,” he wrote.

The earnings rundown

AMD Chief Executive Lisa Su holds the company's new MI300X chip at an event outlining AMD's artificial intelligence strategy in San Francisco, U.S., June 13, 2023. REUTERS/Stephen Nellis

AMD Chief Executive Lisa Su holds the company’s new MI300X chip at an event outlining AMD’s artificial intelligence strategy in San Francisco, U.S., June 13, 2023. REUTERS/Stephen Nellis

Here are the key numbers that analysts are expecting to see out of AMD, as compiled by Bloomberg:

Revenue: $5.7 billion expected

Adjusted EPS: 68 cents expected

Adjusted Gross Margin: 51% expected

Data center revenue: $1.62 billion expected

Gaming revenue: $1.53 billion expected

R&D expenses: $1.45 billion expected

Q4 revenue: $6.4 billion expected

On Friday, Cathie Wood’s Ark Invest bought more than 50,000 shares of AMD, a purchase valued at more than $5 million.

Currently, Wall Street analyst recommendations for AMD shake out to 39 buys, 12 holds, 1 sell.

AMD shares are up about 50% year-to-date.

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on X, formerly Twitter, at @agarfinks and on LinkedIn..

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