Shares of chip companies decreased Wednesday after AMD predicted a pessimistic outlook, indicating more slowdown in PC demand and slow expenditure in data centers. For the quarterly period, AMD told that it anticipates $5.7 billion in revenue whereas analysts were expecting $5.81 billion. The wider market also fell on Wednesday because Fitch Ratings lowered the long-term foreign currency issuer default rating of the United States.
Chip stocks dropped on Wednesday following AMD's prediction of lower-than-anticipated revenue, which caused heightened worry that the PC industry's unsteadiness and lagging corporate expenditure may linger. AMD stocks tumbled 7%, Marvell fell by nearly 6%, Nvidia dropped almost 5%, Intel and Texas Instruments decreased by in excess of 3%, outpacing the overall tech sector. AMD's quarterly figures, declared late on Tuesday, showed expected sales of $5.7 billion, lower than the predicted $5.81 billion. The firm reported anemic customer segment sales for the second quarter, 54% lower than before, and data center business sales decreased 11%, triggered by feeble corporate interest. The Nasdaq had its second-most severe day this year, decreasing 2.1%, due to Fitch's downgrade of the U.S.'s long-term foreign currency issuer default rating from AAA to AA+, as a result of the imminent financial deterioration, governance erosion and increasing overall debt. On Wednesday, responding to these developments, AMD's CEO Lisa Su told CNBC's "Squawk on the Street" that the company is heading towards a recovery phase for PCs and that AMD expects growth to start building up in the second half of the year. Jefferies analysts maintained their buy rating for the stock in a note to customers, suggesting that the PC rebound is in sight.
Analysts are observing AMD, one of the few producers of GPUs needed for artificial intelligence, to see if its server chips can capture market share from leading competitor Intel. In an interview with CNBC, CEO Lisa Su indicated that AMD is working closely with Microsoft and other partners to take advantage of AI and make PCs more productive from here on out. In the third quarter, the company unveiled the MI300X chip which is utilized to generate AI models like OpenAI's ChatGPT; AMD said the product was available for sampling and the production would see an escalade in the final quarter of the year. Su proclaimed, "It's an exciting time for the PCs." Kif Leswing of CNBC added to this report.
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