00:00 Speaker A
The street has such high expectations around this chip maker, AMD, and ultimately, maybe those expectations were a bit too high. We know that earnings have outperformed expectations every single quarter since Q4 of 2023, but earnings this quarter declined based upon that ban of the company to sell their chips to, or rather, ban from chips from China. Now, what we know is that in this battle, in this arms race of the AI revolution, so to say, we know that AMD continues to trail behind that, you know, Godfather of AI, Jensen Wong’s Nvidia, as Dan Ives likes to put it. And that’s what we saw again. We saw AMD’s data centers bring in revenue of up 14% to $3.2 billion. Now, that Trump, or rather Nvidia trumps that in comparison, when you think about what they posted in Q1, their data segment jumped 73% to more than 39 billion. Of course, Nvidia is set to come out later on this month. But the hopes were high, the intentions were high, and now all questions remain about that Q3 guidance and what this could look like when we are able to return to shipments of these AI chips from China.
02:01 Speaker B
Yeah, and there’s also the question of, aside from the China discussion, about what was already priced in the shares. I gotta say I’m just laughing to myself reading a note from Jordan Klein over at Mizuho, so the is the, um, sector specialist on tech. And he said, who really owns AMD or Nvidia just due to upside from sales back into China that have been blocked by Trump? If you do, shame on you, he says, because people are really focused more on the bigger AI story here. But all of that said, Josh, if you look at the, what AMD has done this year, let alone from the lows, you see maybe why things are pulling back a little today.
03:06 Josh Lipton
Well, Julie, to add to that point, who owns an AI stock for them to not beat on earnings per share, right? In the previous quarter. When you look at why a lot of these AI tech stocks rally, it’s because in the prior quarter earnings almost always beat estimates, right? When you look at what the hyper scalars were able to do last week, when you look at what Nvidia does every quarter, an earnings surprise is essentially expected, and that is not what AMD did. And then, yes, when you zoom out over the year, it has been the best performing semiconductor of the year. The stock is up over 40% this year, and you compare it to an Nvidia and a Broadcom. This year, it has actually outperformed, as you’re seeing on your screen now, but you zoom out over the last five years, and AMD has not even come close to the performance that you see on your screen there in blue and yellow from Nvidia and Broadcom, right? So you’ve seen a little bit of a catch-up rally for AMD as people wonder where they’re going to fit into this AI story, but largely they have not been near the forefront of it, of course, and they’ve sort of been chasing. But I think from a quarter, this quarter specific stock story, it’s interesting to think about AMD’s rally off the lows and to see this stock reaction when we think ahead to what’s coming from Nvidia at the end of the month. So Bank of America’s Vivek Arya, the analyst that covers Nvidia, he covers AMD, he had pointed out in his Nvidia preview note, which I know you were talking about the other day, Julie, highlighting that given that Nvidia has rallied so significantly since that April low, the ability to impress the market for some of these AI chip makers might be challenging this quarter. You’re certainly seeing that with AMD, and it makes you wonder about the big one we’re going to get at the end of the month, too.
05:19 Speaker B
Yes, it does indeed.
