All hopes for AMD are now resting

Advanced Micro Devices Inc. puts all the chips in one basket: The Holiday Season.

AMD reported its second-quarter results on Tuesday, but also provided a disappointing third-quarter forecast, as sales of custom video game console chips continued to decline. AMD

AMD, + 1.16%

shares fell more than 4% in afternoon trading, after lifting up about 83% in 2019 pending the launch of new products, the second largest gain of the year to date year. date in the S&P 500 index

SPX, -0.26%

These gains are assuming AMD promised a better second round, a common concession among chip manufacturers this year, which is yet to be proven, as several factors have combined to provide fuel for a semiconductor decline, including a memory chip development and a procurement decline. Skyberg ring firms. AMD's forecast extends the rebound, which expects the latest versions of chips for PCs, servers and data centers to deliver a big boost in the fourth quarter.

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Executives told analysts at the company's conference call that they expect full-year revenue to grow 20%, minus half the custom business where video game console sales are located. Overall, AMD expects revenues to increase by "a mid-single-digit percentage."

"What you can expect when we go from Q3 to Q4 is that the product mix will be better," said AMD chief Lisa Su in response to a question from an analyst about a massive uptick in the fourth quarter.

However, improving the product mix does not work enough to get AMD to the promised land. Through two quarters, the company's sales decreased by 17.6% from the previous year. If AMD hits the midpoint of the third-quarter sales guidance, it will go into the fourth quarter, followed by a total of 9% last year's turnover, much to make up even with a simpler comparison following the fall of cryptocurrency at the end of last year.

"It's a big disaster," Bernstein Research analyst Stacy Rasgon bluntly stated in an interview Tuesday afternoon.

The potential for that rebound is due to the next version of AMD's Epyc server and data center chips, called Rome, to be launched next week, following the release of new CPU chips. While server chips have a longer sales cycle, they will add more revenue and profits, and ultimately provide a new revenue stream in an area AMD has been absent in recent years, until it launches its new chip family based on its Zen architecture.

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“Consoles are falling, so the kernels are crashing. If you want to be bullish, you can lock it in, ”noted Rasgon, also pointing out that AMD includes $ 100 million extra from Samsung Electronics Co. Ltd.

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in the estimate of 20% revenue growth, following a recent agreement with the South Korean company related to graphics chips.

While it is okay to be optimistic about AMD's new PC and server chips, it is much to be expected that these products will magically turn AMD's years into the last three months of sales. If you invest in AMD to fulfill this promise, you must know that it must perform to perfection to achieve it, and outside forces can still get in the way.

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