Advanced Micro Devices Is Falling After Disappointing Guidance: Here's How Analysts Are Reacting

Advanced Micro Devices, Inc. (NASDAQ: AMD) announced its quarterly earnings results on Tuesday, reporting a $0.10 EPS for the quarter. Results were inline with expectations but first quarter guidance was below consensus.

Analysts at Credit Suisse maintained an Underperform rating.

"Despite better than expected CY16 Rev guidance (growth y/y vrs CS/Street at down ~2.5 percent y/y), we are lowering our CY16 EPS from (-$0.23) to (-$0.30) to reflect lower GM and higher OpEx," Credit Suisse noted.

The firm added that current revenue guidance isn't conservative, as it implies 30 percent half-over-half growth. 

Deutsche Bank maintained a Hold rating.

"AMD delivered a solid quarter but once again disappointed on guidance.While its core Computing & Graphics business appears to be executing relatively well, the EESC business remains exceedingly volatile.Looking forward, while the co believes it can grow in 2016, we take a more conservative tact given the large number of unknown variables (we model 2016 revs -3 percent y/y).With expectations now higher and numerous product launches creating risk, we maintain our Hold rating and $2 P/T," the firm noted.

Pacific Crest reiterated its Sector Weight rating.

"Q4 revenue of $958 million (-10 percent q/q) was in line with our estimate of $955 million with stronger Computing & Graphics sales (driven by notebook APUs) offset by weaker semi-custom SoC sales. Gross margin was 30 percent, roughly in line, equating to EPS of ($0.10), in line with our estimate," the firm commented.

While gross margins are above Pacific Crest estimates, the firm said weak first quarter guidance is driven by gaming seasonality and China's deteriorating macro environment.