AMD revenue forecast disappoints as crypto demand wanes

(Reuters) – Advanced Micro Devices Inc (AMD.O) on Wednesday forecast fourth-quarter revenue below estimates as the chipmaker wrestled with waning demand from cryptocurrency miners for its high-margin graphic processors, sending its shares down 22 percent.

FILE PHOTO: Visitors look at motherboards being displayed at the AMD booth during the 2012 Computex exhibition at the TWTC Nangang exhibition hall in Taipei June 6, 2012. REUTERS/Yi-ting Chung/File Photo

AMD and Nvidia, its main rival in the gaming chip market, were the biggest beneficiaries of a cryptocurrency boom last year as miners invested in new rigs to keep up with demand.

However, with cryptocurrency prices in free fall, mainly due to regulatory worries, demand for chips that power mining networks has declined.

AMD said it now expects revenue of about $1.45 billion, plus or minus $50 million, below analysts’ estimates of $1.6 billion, according to Refinitiv data.

The chipmaker said revenue from its graphics and computing business, which sells Ryzen desktop processors and Radeon graphics cards, rose 12 percent to $938 million.

AMD said strong sales of Ryzen chips were partially offset by lower revenue from its graphics business, where blockchain-related GPU sales were negligible. “The miss was due to GPU. AMD had too high an exposure to the crypto-currency market. Additionally, they do not have a competitive line-up in the PC Gaming market,” Summit Insights Group analyst Kinngai Chan said.

Sales in its enterprise, embedded and semi-custom unit, which makes EPYC server processors, fell 5 percent to $715 million.

AMD said net income climbed to $102 million, or 9 cents per share, in the third quarter ended Sept. 29 from $61 million, or 6 cents per share, a year earlier.

Excluding items, AMD earned 13 cents per share, narrowly beating estimates.

Revenue rose to $1.65 billion, but missed estimates of $1.7 billion.

AMD shares, which have more than doubled this year, were trading at 17.84 after the bell. Nvidia was down 2.5 percent at $194.98.

Reporting by Arjun Panchadar in Bengaluru; Editing by Sai Sachin Ravikumar

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