Advanced Micro Devices Inc. AMD is set to report third-quarter 2024 earnings on Tuesday, Oct. 29, after the market close.

The third-largest U.S. semiconductor company by market capitalization—behind Nvidia Corp. NVDA and Broadcom Inc. AVGO—has significantly lagged behind its industry peers year to date.

Will AMD’s third-quarter earnings signal an inflection point, setting the stage for a comeback, or will the performance gap with top competitors continue to widen from here?

Chart: AMD Has Sharply Underperformed Nvidia Year To Date

Wall Street Expectations For AMD Earnings, Revenue In Q3 2024

Wall Street anticipates AMD to report adjusted earnings per share (EPS) of 92 cents for the third quarter of 2024, reflecting a robust 31% increase from 70 cents in the same quarter last year, as per Benzinga Pro data.

GAAP revenue is projected to reach $6.71 billion, a 16% year-over-year increase from $5.8 billion in the third quarter of 2023.

A Positive Track Records Of Earnings Beats, Yet With Mixed Stock Reactions

Over the last eight quarters, AMD has consistently, yet marginally, beaten EPS expectations in seven out of eight reports, with the only miss occurring in the third quarter of 2022 (-1.47%).

Revenue has also largely exceeded expectations, with positive surprises in seven quarters, the largest being a 7.31% beat in Q1 2024.

However, the stock’s one-day price reaction has been mixed, demonstrating significant volatility.

While strong quarterly beats drove substantial gains in the third quarter of 2023 (+9.69%) and the fourth quarter of 2022 (+12.63%), other quarters saw sharp declines despite solid results, such as the first quarter of 2024, where the stock dropped 8.91% following both a strong EPS beat of 8.77% and a 7.31% revenue surprise.

Strong positive stock reactions occurred in the third quarter of 2023 (+9.69%) and the fourth quarter of 2022 (+12.63%).

Negative reactions were recorded in the first quarter 2024 (-8.91%) and the first quarter of 2023 (-9.22%), despite substantial EPS and revenue beats, suggesting investor concerns about guidance-related issues

Rosenblatt Securities: 60% Upside Potential With Server And GPU Gains

Rosenblatt analyst Hans Mosesmann is optimistic about AMD’s ability to meet and slightly exceed the Street’s expectations.

Mosesmann indicated that AMD’s EPYC server CPUs and MI300 AI GPUs are on a positive trajectory, particularly in light of expanding market share in the high-performance computing space. However, he expects “slight growth” in embedded segments and double-digit declines in gaming consoles, which could act as a drag on AMD’s overall performance.

“We believe the shares are set to outperform the group after several quarters of skepticism around MI300’s market share potential and mixed quarter results,” Mosesmann said.

Rosenblatt maintains a bullish 12-month price target of $250, implying a potential 60% upside from current levels.

Goldman Sachs: Long-Term Optimism on AI Infrastructure and Server CPU Share

Goldman Sachs analyst Toshiya Hari indicated that AMD has underperformed due to downward revisions in consensus EPS estimates for 2024, which have dropped 9% since the beginning of the year, while competitors like NVIDIA have seen significant upward EPS revisions.

“We maintain our Buy rating on AMD given our expectation for sustained growth in AI infrastructure capex, a cyclical recovery in server CPUs, and continued market share gains in Enterprise,” Hari said.

He highlighted AMD’s increasing x86 server CPU market share, which rose to 34% as of Q2 2024, from less than 20% in early 2022.

Goldman Sachs estimates that AMD’s upcoming next-generation server CPUs could further solidify its edge over Intel Corp. INTC in total cost of ownership (TCO) and efficiency.

ETFs With Significant AMD Exposure

Investors looking for indirect exposure to AMD’s performance may consider ETFs heavily weighted in AMD.

Below are the top 10 ETFs with the largest allocations in AMD shares:

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