What happened
Advanced Micro Devices (AMD +1.21%) got a boost today following Meta Platforms' third-quarter earnings call late Wednesday afternoon.
Meta announced that it would maintain current spending plans on data centers and servers in 2023, which is good news for AMD's data center business. Shares of AMD were up as high as 4% this morning before giving up those gains.
Worries over a slowing PC market and the potential for that to spill over to weak chip sales in the data center space have sent AMD stock down 58% this year. Here's what Meta's guidance means for AMD in the near term.
NASDAQ: AMD
Key Data Points
So what
Meta said it plans to spend between $32 billion and $33 billion on data centers, servers, and network infrastructure in 2023. The social media giant is suffering as advertising dries up, but this isn't slowing down its plans to invest in technology to build the future.
Earlier this year, Meta announced it was building the world's most advanced artificial intelligence (AI) supercomputer using chips from Nvidia and AMD. AMD reported a revenue increase of 70% year over year in the second quarter, partly driven by growth in data center.
Now what
Meta's guidance suggests that large enterprises will continue to invest in data center infrastructure in the near term. However, investors should brace for a softer quarter from AMD when it reports earnings on Nov. 1.
AMD expects third-quarter revenue to be up approximately 55% year over year. Management expects the quarter to be led by growth from the data center and embedded segments, which implies weaker demand in desktop chips sold to consumers.
Still, if data center spending remains strong into 2023, that could provide a soft landing for this leading chip producer.
