'This was not an exceptional result': Why AMD stock tanked 10% after earnings

What happened: Advanced Micro Devices (AMD) dropped 8% successful premarket trading connected Wednesday.

What's down the move: The chipmaker reported grounds gross and 2nd 4th net connected Tuesday, beating Wall Street expectations connected some apical and bottommost lines.

However, the company's results and forecast failed to impressment investors looking for bigger beats.

"It was priced for thing overmuch person to a blowout," Shay Boloor, Futurum main marketplace strategist, told Yahoo Finance aft the net report. "It was priced for an exceptional result, and this was not an exceptional result."

AMD reported gross of $11.54 billion, up 50% from $7.69 cardinal a twelvemonth prior, topping Wall Street expectations. Adjusted net per stock came successful astatine $1.66 against the $1.62 expected.

Wall Street adjacent expected booming maturation successful information halfway revenue, which much than doubled year-over-year and present represents 58% of full revenue, up from 42% a twelvemonth ago.

"The institution did bushed crossed the board, but it wasn't capable to reset expectations for a banal that's trading astir 60 times earnings," Boloor said.

Capital expenditures besides accrued significantly, reaching $808 cardinal for the quarter, up from $282 cardinal successful the year-ago play and $389 cardinal successful the March quarter.

"That's a shocking upside revision for the capex number," the strategist added.

What other you request to know: For the existent quarter, AMD expects gross of astir $13 billion, positive oregon minus $300 million. While that exceeds immoderate expert estimates of $12.5 billion, it falls abbreviated of the highest forecasts, which called for up to $14 billion.

The institution besides warned of a slowing PC market, though it expects to outperform the broader industry.

"Looking to the 2nd fractional of the year, we're readying for a softer PC marketplace arsenic higher representation and constituent costs measurement connected demand," CEO Dr. Lisa Su said during the company's net call.

"Against this backdrop, we expect our lawsuit concern to execute amended than the market," she added.

AMD noted that Gaming graphics gross declined twelvemonth implicit year, arsenic higher industrywide constituent costs drove up graphics paper prices and weighed connected wide demand.

Like galore semiconductor stocks, AMD has posted an awesome summation this year, though the shares person experienced periods of volatility successful caller months. The banal is down much than 10% from its June all-time high, but it remained up much than 140% twelvemonth to day arsenic of Tuesday's close.

Ines Ferre is simply a elder concern newsman for Yahoo Finance. Follow her connected X astatine @ines_ferre.

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