AMD's revenue forecast is disappointing as cryptographic demand declines

(Reuters) – Advanced Micro Devices Inc (AMD.OOn Wednesday, fourth-quarter revenue was lower than estimates as the chip maker faced declining demand for cryptocurrency miners for its high-margin graphics processors, reducing its stock by 22 percent.

AMD and Nvidia, its main rival on the gaming chips market, were the main beneficiaries of the cryptocurrency boom last year, miners having invested in new platforms to meet the demand.

However, with cryptocurrency prices plummeting, mainly due to regulatory concerns, the demand for chips fueling mining networks has decreased.

According to Refinitiv data, AMD now expects sales of approximately $ 1.45 billion, plus or minus $ 50 million, lower than analysts' estimates of $ 1.6 billion.

The chip maker said revenue from its graphics and computer business, which sells Ryzen desktop processors and Radeon graphics cards, grew 12 percent to $ 938 million.

AMD said strong sales of Ryzen chips were partially offset by lower revenue from its graphics business, where blockchain GPU sales were negligible. "The fault was due to the GPU. AMD was too exposed to the cryptocurrency market. Plus, they're not competitive in the PC gaming market, "said Kinngai Chan, an analyst at Summit Insights Group.

Sales of his company, an integrated, semi-customized unit that manufactures EPYC server processors, dropped by 5 percent to $ 715 million.

According to AMD, net income reached $ 102 million, or 9 cents per share, in the third quarter ended September 29, compared with $ 61 million, or 6 cents a share, a year earlier.

Excluding the items, AMD gained 13 cents per share, just shy of the estimates.

Revenues reached $ 1.65 billion, but missing estimates of $ 1.7 billion were missed.

AMD's shares, which more than doubled this year, were trading at 17.84 after the bell. Nvidia was down 2.5% to 194.98 dollars.