AMD stock falls as PC industry slumps

Yahoo Finance’s Daniel Howley joins the Live show to discuss the decline in stock for AMD as the PC industry slump hits chipmakers.

Video transcript

JULIE HYMAN: Let's get to some movers now. Shares of AMD, Advanced Micro Devices, under pressure as the PC-industry slump weighs on chip makers. AMD reporting a 9% drop in revenue in the first quarter. This coming after Intel reported sales falling 36% in the same period.

Joining us now to discuss, Yahoo Finance's Dan Howley. The shares right now down 6%. And, Dan, it's so interesting because AMD had been gaining share on Intel, right, after lagging it for a long time. But it seems like in this environment, it's tough for everybody.

DAN HOWLEY: Yeah, both companies struggling, especially when it comes to the PC market. We saw a Gartner release basically saying that shipments worldwide of PCs had collapsed 30%. That's a second consecutive quarter of massive declines. This was in Q1. Q4 was the prior quarter where we saw those declines.

For AMD in particular, they had a 64% year-over-year decline in client revenue. That's where they sell those PC chips, either to servers or to individual OEMs that then put them into the laptops that we purchase.

So both companies, Intel and AMD, really suffering there. You know, Intel, for what it's worth, they kind of telegraphed this. I mean, so did AMD. But Intel, they've really been struggling as far as being able to kind of step up and compete, at least on a performance level. PC revenue for them fell 38% this past quarter when they reported that 36% drop in revenue.

But, you know, AMD seemingly has them kind of on the ropes as far as the broader performance goes in the PC market. People are looking more towards AMD now. They've been doing that for some time.

And, you know, Pat Gelsinger has this turnaround plan. They want to fabricate. They want to speed up the development of chips. How fast that works and how fast we start to see that impact is really dependent on whether or not he can get that plan to go through. And considering that, you know, we're seeing these steep revenue declines, it does make you wonder, will investors continue to put up with that?

You look at, though, the likes of NVIDIA, meanwhile. They don't have to deal with the PC space as much. Yes, they're in the gaming space. Yes, that's a key component. But you would usually find in Nvidia chips in more higher-end computers. The Intels, the AMDs, they're across the board, you know, whether that's entry level, high end. So maybe it won't hit Nvidia as hard when they report later this month.

But, really, this PC industry continues to struggle. No one needs a computer right now. And look, if you do, maybe you're putting off the purchase because you're trying to save a little bit of cash.

BRAD SMITH: Just very quickly here, Dan, they talked about their AI roadmap as well, and even we heard from some of the other megacap tech companies last week really spelling out where chips fit into any type of generative AI play because it's still going to come back to the data center at the end of the day. Does the market seem convinced at all about AMD's AI play here?

DAN HOWLEY: Yeah, I mean, I think, really, the leader is clearly Nvidia at this point, right? And I think part of that is because they've proven that they have the capabilities to do this, and so many companies rely on NVIDIA right now at this point.

They've been angling for AI for a while, right? They were doing this well before generative AI was something that we were even discussing, and so they kind of carry over that cachet.

I will say that AMD does have its own AI capabilities. It's building that out. That's something that Lisa Su, the CEO at AMD, discussed. But I think as far as AI goes, you know, look at Meta. They were trying to work on their own chips. They went out and spent a boatload on NVIDIA chips, right? So I feel like every time Nvidia opens its mouth, they're discussing a new deal with another company where they're going to be using their products. So they still have a really, really solid lead there.