AMD stock crashes 9% as Wall Street reacts to 'weak' outlook
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AMD (NASDAQ:AMD) shares fell more than 9% on Wednesday as analysts digested the semiconductor company's outlook for the second-quarter, noting there are a number of headwinds working against the company.
Bank of America analyst Vivek Arya downgraded AMD (AMD) to neutral from buy and trimmed the per-share price target to $95 from $98, noting the company's "consistent execution" and its product cycles, particularly in AI, are attractive. However, Intel (NASDAQ:INTC) is being "aggressive" on pricing and promotion and its outlook for 50% half-over-half growth in the back-end of the year is risky, considering there is a "restrained" cloud computing spending environment.
Lastly, the company's position in AI accelerators is improving, but it is still "modest," especially when compared to Nvidia (NASDAQ:NVDA) and there is "limited" headroom for multiple expansion until revenue growth reaccelerates, Arya added.
Looking ahead, AMD (AMD) expects second-quarter revenue to be around $5.3B, plus or minus $300M, with adjusted gross margins around 50%. Analysts were expecting around $5.51B in revenue and gross margins of 50.4%.
In addition, AMD (AMD) said it will keep its operating expenses flat for the rest of the year until demand improves.
Speaking on the conference call, CEO Dr. Lisa Su said AMD (AMD) was still dealing with issues in the data center business, as larger customers still work through inventories. 
Su added that AMD (AMD) is looking for AI to be one of the keys to its future market expansion. "We are in the very early stages of the AI era," Su said. "This will require significant increases in computer performance. AMD is in a strong position for this opportunity."
UBS analyst Timothy Arcuri said the first-quarter results were "in-line" and the revenue guidance was "about what most investors expected," adding that the company is seeing some hiccups in the data center business, as Genoa's ramp is slower than prior Epyc generations and Intel (INTC) is executing better. 
However, AMD (AMD) is only now just starting to gain share in the enterprise server market, with Arcuri stating its server CPU share gain "has legs at least into 2025 and more likely even longer" and the company's other areas, especially AI, look promising down the line.
Arcuri added that AMD's (AMD) MI300 should be "well positioned" as a number of AI customers have said Nvidia's (NVDA) lead times for its H100 chips are now 18 months or more. "Given our work on the size of the [generative] AI hardware opportunity, we can easily see this being a new multi-$B revenue stream in 2025," Arcuri wrote.
KeyBanc Capital Markets analyst John Vinh lowered estimates on AMD (AMD) after the results and guidance, but noted that the second-half outlook is encouraging, as it "implies Genoa issues have been resolved and MI300 is expected to contribute meaningfully."
Seeking Alpha Investing Group Leader Stone Fox Capital said AMD (AMD) is a second-half growth story and the company is seeing market share gains in both the data center and AI.
Analysts are largely bullish on AMD (AMD). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates AMD a HOLD.
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