Advanced Micro Devices shares jump as results, outlook show chipmaker's strength
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Advanced Micro Devices (NASDAQ:AMD) shares rose as much as 6% on Wednesday after the semiconductor company posted first-quarter results that topped expectations and raised its full-year guidance.
However, despite AMD's (AMD) optimism, several Wall Street analysts cut their price targets on the company's stock due to contractions that could affect the chip sector.
Benchmark analyst Cody Acree lowered his price target on AMD (AMD) to $125 a share from $145 due to what he said was a lower earnings multiple. However, Acree still highlighted AMD's "across-the-board strength in demand and solid internal execution."
At Mizuho Securities, analyst Vijay Rakesh, who has a buy rating on AMD's (AMD) stock, lowered his price target to $145 a share from $160. Rakesh noted that the company saw strength in its data center business, and that its supply levels were better-than-expected, given the industry's constraints.
SMBC Nikko Securities America analyst Srini Pajjuri lowered his price target on AMD (AMD) to $100 a share from $125. But, even so, Paijuri said that the company is benefiting from increased market share in servers, strong console demand and improved supply. 
"We continue to be impressed by AMD's execution and expect the company to benefit from healthy data center demand and further gains in Server," Paijuri wrote in a note to clients.
Bucking the trend, Bank of America analyst Vivek Arya raised his per-share price target to $160 from $153. Arya said AMD (AMD) is "better positioned than ever" due to the company's scale, manufacturing relationships and portfolio breadth, which should allow it "to gain wallet share in the secularly growing server market."
For the period ending March 26, the Lisa Su-led AMD (AMD) earned $1.13 a share, excluding one-time items, on revenue of $5.88 billion, up 71% year-over-year. AMD's (AMD) performance was led by strength in its thanks to its computing and graphics, and enterprise businesses, as well as the inclusion of $559 million in Xilinx revenue. Excluding its Xilinx acquisition, AMD said it generated $5.32 billion in sales.
Wall Street analysts were expecting the company to generate $5.57 billion in revenue during the period.
On an adjusted basis, gross margins, a closely watched measure for semiconductor companies, came in at 53%, the company said.
For the second quarter, AMD (AMD) expects revenue to be between $6.3 billion and $6.7 billion, compared to estimates of $6.36 billion. AMD (AMD) also raised its full-year guidance, saying it now expects to generate $26.3 billion in revenue, up 60% year-over-year, up from a previous outlook of 31%. The company expects non-GAAP gross margins to be 54% during the year, up from a prior outlook of approximately 51%.
On AMD's (AMD) earnings call, Tuesday, Su said the company has reached a "significant inflection point" in its technological transformation, adding that Xilinx significantly expanded its product and tech portfolios.