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Why AMD stocks fluctuate today – The Motley Fool

Shares of Chip Company Advanced Micro Devices (NASDAQ: AMD) rose on Wednesday after a mixed fourth-quarter report. AMD posted lower sales than expected, and the results were in line with analyst estimates. The company's first-quarter forecast called for a sharp drop in sales, but the solid full-year guidance was a source of enjoyment. The stock gained 15.2% at 11:30 EST (EST).

AMD's fourth quarter revenue was $ 1.42 billion, an increase of 6% over the previous year, but approximately $ 20 million below the average analyst estimate. Computer and graphics revenues increased 8.6% year-on-year due to the strength of the company's Ryzen PC processors. The Enterprise, Embedded, and Semi-Custom segments delivered flat revenues, with EPYC server processor revenue growth offsetting lower semi-custom revenue.

  Rising stock chart.

Source: Getty Images. GAAP EPS was $ 0.08, compared to $ 0.01

in the same period last year, and was in line with analyst expectations. Non-GAAP gross margin increased 7 percentage points year-on-year by 41%, with the improvement being driven by Ryzen and EPYC.

AMD's first quarter forecast was downright horrible thanks to the bursting of the cryptocurrency bubble. The company expects sales of $ 1.25 billion, plus or minus $ 50 million, down 24% from a year ago. AMD is still going through video card stocks, and the expected growth of Ryzen and EPYC will not be nearly enough to offset the graphics weakness.

Nevertheless, AMD continues to expect revenue growth for 2019. Revenue growth this year, notably through Ryzen, EPYC and the company's data center GPU products. This optimistic outlook for the full year should make the stock rise.

Well, what

AMD will bring to market is a new generation of Ryzen CPUs, based on a 7nm manufacturing process, sometime in mid-2019. The second generation of EPYC server processors will be available soon, and AMD wants to gain a double-digit share of the lucrative data center market.

The growth of the CPU business will have to compensate for a slump in the GPU business. AMD will begin the year 2019 with a strong decline in sales, but it expects a strong second half-year to more than offset its GPU problems. As the stock goes up, investors buy this story.

Timothy Green has no position in any of these stocks. The Motley Fool has no position in any of these stocks. The Motley Fool has a disclosure policy.

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