AMD Pushes the Chip Sector To New Highs

Today was a great day for chipmaker AMD (NASDAQ:AMD). How can you tell? Just take a look at the avalanche of good news that came out around the company. Its earnings looked solid, and though there was potential trouble ahead, the company seemed braced for impact. AMD’s share price climbed throughout the day, and several ETFs made gains from AMD’s incredible run as well.

AMD led off the cavalcade of good news with its earnings results. It not only beat earnings projections—it came in at $0.69 against TipRanks projections calling for $0.67—but it also turned in a win on earnings as well. Though it warned investors and analysts of a likely 10% decline against last year’s numbers, the overall decline would take most other chipmakers down as well.

That actually led to the second piece of good news. Analysts and investors largely agreed with the 10% reduction forecast. AMD’s assertion that its data center business would stay strong, and embedded systems would hold out, rang true. The notion that PC and gaming business would falter came as little surprise. Meanwhile, Bank of America analyst Vivek Arya noted that earnings would likely come back in the year’s second half.

Finally, AMD CEO Lisa Su drove the point home, noting that AMD was in a good position to take advantage of strength in the data center market. Su also agreed with Vivek Arya, noting that a recovery was likely in the second half of 2023. Su noted that the data center was “our largest growth driver”, and expects to use the gains in that sector to outpace the losses from PC and gaming.

A range of ETFs, meanwhile, gained ground thanks in large part to AMD’s gains. The Direxion Daily Semiconductor Shares ETF (SOXL) was up over 17% in Wednesday trading. However, the Direxion Daily Semiconductor Bear 3x Shares ETF (SOXS) plunged over 15%. Finally, the SPDR S&P Semiconductor Index (XSD) gained nearly 5% in trading on Wednesday.

Disclosure