Computer chipmaker Advanced Micro Devices Inc. delivered first-quarter financial results today that came in above expectations, but its stock fell on a weak outlook for the current quarter, even as officials promised renewed growth in the second half of the year.

The company reported earnings before certain costs such as stock compensation of 60 cents per share on revenue of $5.35 billion. Although sales fell 9% from a year ago, the results still topped Wall Street’s forecasts of 56 cents per share in earnings and $5.3 billion in revenue. Its bottom line wasn’t nearly as impressive, though, as AMD swung from a profit of $786 million one year ago to a net loss of $139 million today.

Investors were initially encouraged by the results, only to be disappointed by AMD’s forecast for the second quarter. The company said it expects sales of around $5.3 billion, some distance below the analyst’s consensus estimate of $5.48 billion.

AMD Chief Executive Lisa Su (pictured) did her best to reassure investors, saying that the company “sees growth in the second half of the year as the PC and server markets strengthen,” but her words couldn’t prevent an after-hours selloff, and the company’s stock fell more than 6% in extended trading.

Weakness in the PC market was all too evident with AMD’s sales breakdown. The company’s client group, which covers sales of chips for desktop computers, laptops and notebooks, saw its revenue fall by an alarming 65% from one year earlier, to just $739 million. The drop was perhaps even worse than expected.

Although it’s clear the PC market is in a slump, recent research from International Data Corp. shows that it’s still faring better than AMD is. According to IDC, global PC shipments fell just 30% during the first quarter. Moreover, AMD’s biggest rival Intel Corp. last week reported an overall sales decline of 36%.

Still, Su told analysts on a conference call she is confident that “the first quarter was the bottom for our client processor business.”

AMD’s data center segment is also suffering from somewhat muted demand, and revenue remained more or less flat from a year earlier at $1.295 billion. What’s more, AMD seems confident that server chip sales are about to grow again.

“I would say from an overall market standpoint, I think enterprise will still be mixed, with the notion that we expect some improvement,” Su said. “It depends a little on the macro situation.”

AMD’s other segments include networking, which emerged as the biggest bright spot for the company. It saw networking revenue leap from $595 million one year ago to $1.56 billion today, partly thanks to additional sales resulting from its acquisition of Xilinx Inc. last year. Meanwhile, AMD’s gaming segment, which includes graphics processors for PCs and chips for consoles, pulled in $1.76 billion in sales, down from $1.88 billion a year ago.

The earnings report shows that AMD, like Intel and other components manufacturers, is struggling on multiple fronts, analyst Charles King of Pund-IT Inc. concluded. “The company’s client chip group is the biggest sign of those difficulties, reflecting deeper problems in PC sales, especially in consumer systems,” he said. “However, softness in the GPU group’s performance suggests that AMD-based gaming systems aren’t catching fire as quickly or hotly as some vendors hoped.”

While King said the low-power networking chip segment is a bright spot, he was not optimistic about any immediate change in the company’s fortunes. “Overall, AMD’s earnings and outlook suggest that if investors are looking for cheery news, there may be more stable elements to bet on than silicon,” he said.

Holger Mueller of Constellation Research Inc. agreed with those sentiments, saying AMD is suffering from the PC market’s post-pandemic hangover and a slowdown in server chip sales. “The good news is that AMD’s innovation portfolio is going well, with data center and embedded chip sales generating more than 50% of revenue,” he continued. “The networking segment also put in a remarkable performance, with revenue that almost tripled. Looking forward, shareholders will be watching to see how resilient the company can be.”

AMD’s results underscore the turbulent nature of the chipmaking industry, where the major players’ fortunes can vary wildly depending on the specific segments they cater to. On Monday, NXP Semiconductors NV, a Dutch chipmaker known for its focus on automotive chips, blew past Wall Street’s targets. It posted first-quarter sales of $3.12 billion, flat from a year ago, and adjusted earnings of $3.19 per share, comfortably ahead of the $3 billion and $3.02-per-share forecast by analysts.

NXP said automotive chip sales, which account for about half of its business, rose 17%, to $1.83 billion, in the quarter. That heloffset significant declines in its Industrial IoT, Mobile and Communications chip segments.

Automotive chip sales are likely to hold up too, with NXP offering a strong outlook for the second quarter. It sees earnings of between $3.07 and $3.49 per share, the midpoint of which is ahead of Wall Street’s forecast of $3.15 per share. Meanwhile, it estimates revenue at between $3.1 billion and $3.3 billion, versus the analysts’ $3.17 billion consensus.

Photo: AMD Global/Flickr