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Advanced Micro Devices (AMD) CEO Lisa Su on Wednesday reinforced the chipmaker’s expectation to increase data-center revenue in 2023 — a key part of the Club holding’s broader growth plan. AMD has confidence in its data-center outlook because of its close working relationship with the companies that buy its chips, Su said in a CNBC interview one day after AMD reported a fourth-quarter earnings beat . “These cloud customers are planning for their full year. … Each one is different, but at the end of the day, we need more compute in the industry and we see them moving more and more of their computing capabilities to AMD,” Su said. “So, I think we feel good about our positioning.” AMD shares rose more than 8%, to over $81 apiece, on Wednesday. In general, investors are relieved that AMD still expects data-center growth in 2023 despite mounting economic pressures. This is especially notable after longtime semiconductor rival Intel (INTC) reported disastrous results and first-quarter guidance last week, which caused some analysts to grow more concerned about AMD . AMD’s data-center outlook isn’t perfect. The company said it expects a relatively softer first six months as cloud customers work through existing inventory, followed by a stronger second half. For the first quarter, in particular, AMD expects data-center sales to be lower than the $1.7 billion it recorded in the fourth quarter of 2022. While AMD did not provide a specific full-year revenue forecast, analysts expect the company’s data-center revenue to grow 18% compared with 2022 levels, to $7.13 billion, according to FactSet. Club take Excess inventory has dragged down other parts of AMD’s business in recent quarters, primarily its PC unit. AMD now expects the first quarter to be the bottom for PCs, which is contributing to the stock’s strong gains Wednesday. However, the inventory problem ultimately proved more sticky than some anticipated. It hurt AMD’s financials and contributed to its stock falling 55% in 2022. The unpleasant PC experience caused AMD’s warning about data-center inventory hurdles to raise the Club’s eyebrows. But Su’s explanation for why the company feels confident in its data-center outlook — namely, that close working relationship with large, influential customers — is reassuring. Of course, AMD would not be immune to a material worsening of economic conditions. But we are glad to hear that, as of now, AMD expects only a quarter or two of inventory issues on the data-center side. During the CNBC interview, Su also repeatedly emphasized AMD’s focus on internal execution — not letting the macro situation stand in its way of delivering more powerful, next-generation chips on time. Under Su’s leadership since 2014, AMD has overcome the inconsistent execution of prior management teams. AMD’s C-suite got a boost last week when Jean Hu officially started as CFO. The well-respected Hu had held the same job at semiconductor firm and ex-Club holding Marvell Technology (MVRL). AMD’s restored reliability has been a key reason for its impressive turnaround and market share gains. AMD expects that continue to again in 2023. “As we look forward to 2023, we have lots of products that are coming out. … We just need to control the things we do control, which is our own execution and really deep partnerships with some of the largest cloud customers in the world,” Su said. (Jim Cramer’s Charitable Trust is long AMD. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Lisa Su, president and chief executive officer of Advanced Micro Devices (AMD), holds a 3rd generation Ryzen desktop processor while speaking during a keynote session at the 2019 Consumer Electronics Show (CES) in Las Vegas, Jan. 9, 2019.
David Paul Morris | Bloomberg | Getty Images
Advanced Micro Devices (AMD) CEO Lisa Su on Wednesday reinforced the chipmaker’s expectation to increase data-center revenue in 2023 — a key part of the Club holding’s broader growth plan.
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