AMD fell heavily in April, but it seems to be in full swing in May.
What happened
Advanced Micro Devices shares (AMD 2.92%) fell 21.8% in April, according to data from Standard & Poor's Global Market Intelligence. The semiconductor company has been hit hard in a bad market for technology stocks, especially those catering to consumer computers.
Semiconductors tend to be sensitive to market movements, both up and down. In addition, higher-value growth stocks were particularly hit last month, as the market became increasingly concerned about inflation and rising interest rates. As a high-growth semiconductor stocks, AMD found itself on the wrong end of the overall market mood.
However, as the earnings reports showed Tuesday night, there is certainly nothing wrong with AMD's operating performance at the business level.
So what next
There wasn't much news for the company during April, apart from the announcement earlier in the month that AMD would buy data center platform company pensando for 1 1.9 billion. Pinsando makes a dedicated processor and software stack that allows customers to optimize their data workloads across multiple types of computing chips and architectures. It should go a long way toward enhancing AMD's data center offerings, which consist of epic processors, graphics chips (GPOs), Xilinx domain programmable gateway arrays (FPGAs), and other system-on-chips (SoCs).
However, the acquisition of bensando was not the reason for AMD's decline last month. Most likely, investors noted high inflation and the need for the Fed to raise interest rates quickly. Again, higher rates mean that future profits are discounted more, hurting growth stocks. Too long hiking rates can cause a recession, which won't be good for chip stocks, either.
Now what
As it turns out, the market may be a bit pessimistic in April-on AMD as well as other chip stocks. On Tuesday night, amd posted impressive first-quarter results that blew out revenue and earnings per share (EPS) forecasts. Total revenue grew 71%, with businesses, custom and embedded chips up 88%, reflecting the strong growth of the cloud. Even the computing and graphics sector, which is exposed to personal computers, grew by 33%, as market share gains managed to overcome some softness in the industry. Earnings per share rose 117% to.1.13, beating expectations of. 0.91.
In the conference call, CEO Lisa sue addressed the PC market concern, saying: "although the PC market is experiencing some softness from several quarters of near-standard unit shipments, our focus remains on the premium, gaming and commercial segments of the market, where we see strong growth opportunities and expect to continue to capture an overall share of customer revenue."
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