By Arsheeya Bajwa and Max A. Cherney
(Reuters) -Superior Micro Units on Tuesday forecast fourth-quarter income simply shy of estimates as provide chain constraints hamper its capacity to fulfill sturdy demand for AI chips, whereas the PC market grows extra slowly than some traders anticipated.
Shares of the Santa Clara, California-based firm fell 5% in prolonged buying and selling. The inventory has risen about 10% to this point this yr.
Demand for AI chips from huge know-how corporations together with Microsoft (NASDAQ:) and Meta (NASDAQ:) has been rising a lot quicker than their provide from AMD (NASDAQ:) and bigger rival Nvidia (NASDAQ:), limiting the chip corporations’ capacity to faucet the order surge.
Income in its knowledge heart enterprise, which incorporates AI chips, surged 122% to $3.5 billion, topping estimates. The corporate has beforehand forecast it might promote greater than $4.5 billion value of AI processors this yr, a determine that’s more likely to obtain an replace through the firm’s earnings name.
Whereas AMD sees sturdy demand for its AI chips, it nonetheless trails front-runner Nvidia, which instructions about 80% of the AI semiconductor market.
Analysts largely consider Nvidia will preserve its majority market share for the foreseeable future, owing partly to its whole AI ecosystem that features the CUDA software program and networking gear.
Capability for the manufacturing of AI chips might be very tight going into 2025, the world’s largest contract chip producer TSMC stated in July, marking a major hurdle for the availability of those superior semiconductors.
The corporate expects income of $7.5 billion, plus or minus $300 million for the fourth quarter, in contrast with analysts’ common estimate of $7.54 billion, in accordance with knowledge compiled by LSEG. AMD forecast an adjusted gross margin of roughly 54%, which met analyst expectations.
The corporate reported income of $6.82 billion for the third quarter, in contrast with estimates of $6.71 billion. AMD reported adjusted earnings of 92 cents a share, in step with analyst expectations.