Chip stocks drop as AMD dips, Samsung misses crumbling PC demand estimates

Chip stocks drop as AMD dips, Samsung misses crumbling PC demand estimates

Written by Sinad Karahimetovic

Chip stocks are trading lower in pre-opening trading on Friday after two major global chip makers โ€” Advanced Micro Devices (NASDAQ:) and Samsung Electronics (OTC ๐Ÿ™‚ โ€” โ€” reported weak results on the back of weak PC demand.

Samsung (KS ๐Ÿ™‚ reported operating profit of 10.80 trillion won, well below Bloomberg’s consensus of 12.12 trillion won and down 32% year-on-year. Sales came in at 76.00 trillion won, up just 2.7% year-on-year, and again below analysts’ average estimate of 78.5 trillion won.

BMO analysts noted that both revenue and operating profit came in “significantly below” estimates. UBS analysts reiterated the buy rating on Samsung shares despite the lower ratings.

โ€œWe expect display monitoring in the industry to remain the main discussion to focus on going into next year. Despite recent press comments on Samsung ‘not cutting production’, our view remains that while we don’t intend to reduce chip memory, we believe Samsung is looking to Reducing chips by other meansโ€”such as longer production cycle time and longer equipment downtime for equipment lifeโ€”effectively achieve similar results.โ€œWe also expect a 37% year-over-year decline in WFE memory in 2023,โ€ UBS analysts wrote in a note.

Separately, AMD released preliminary results that failed to achieve revenue consensus of more than 1 billion. The company blamed the poor results on a “large inventory correction across the PC supply chain.”

Bank of America analysts said they expect AMD’s weak preliminary results to “be a more negative reading than its PC peer INTC, but also somewhat for NVDA (consumer graphics) and related data center and memory peers.”

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Intel (NASDAQ ๐Ÿ™‚ shares are down 3% in the pre-market, while NVIDIA (NASDAQ :)) shares are down more than 3%. Similarly, shares of Micron (NASDAQ:) and Qualcomm (NASDAQ) are down more than 1% in Friday’s pre-opening trading.

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