Investors were nervous Wednesday morning, as they awaited news that they've been anticipating for a long time. The Federal Reserve's monetary policy meeting will come to an end this afternoon, and when it does, market participants will have a better idea of what the central bank intends to do throughout 2023. The uncertainty had index futures on the Nasdaq Composite (^IXIC 1.59%) trading down just 0.1% immediately before the market open.
On the Nasdaq, semiconductor stocks have been in the spotlight lately, and Advanced Micro Devices (AMD 2.44%) stock was on the rise early Wednesday after the company reported its latest financial results after the market closed Tuesday afternoon. However, the stock seeing much larger gains on Wednesday morning was Mercury Systems (MRCY -0.29%), which finally started to give some of its more vocal investors what they had wanted to see for a long time. Read on to get the news on both of these advancing stocks.
AMD overcomes uncertainty
Shares of Advanced Micro Devices were up 4% in premarket trading Wednesday morning. The semiconductor chip maker posted solid results for the fourth quarter and the full 2022 year, and any discomfort about AMD's outlook failed to show up in the stock price's move.
AMD's fourth-quarter performance was mixed. A 16% rise in revenue to $5.6 billion showed continued demand for semiconductor chips. However, cost pressures caused a 45% jump in operating expenses, causing AMD's adjusted earnings to come in at $0.69 per share, down 25% year over year.
AMD CEO Lisa Su was still optimistic in her assessment of how 2022 went. With a 44% rise in sales and adjusted earnings growth of 25% to $3.50 per share, Su pointed to acceleration in AMD's data center business as a key driver of performance to overcome weak demand for PCs in the second half of the year. Moreover, the completion of its Xilinx acquisition should further diversify AMD's business, helping it gain resilience and strength even as demand trends become less certain.
For the first quarter of 2023, AMD expects sales of $5 billion to $5.6 billion, which would be down 10% from year-ago levels. Until the PC and gaming segments start to rebound meaningfully, AMD could face some short-term sales pressures, but the long-term outlook for the company looks a lot more favorable than it did a few years ago.
Mercury makes a move
Meanwhile, shares of Mercury Systems jumped 13% before the opening bell on Wednesday. The defense technology specialist reported its fiscal second-quarter financial results for the period ending Dec. 30, 2022, but what moved the stock was news that Mercury would move forward with plans that activist investors have urged it to do for a while now.
Mercury's business remained somewhat sluggish during the quarter. Revenue of $230 million was up 4% year over year, with much of the gains coming from recent acquisitions. However, adjusted net income fell by roughly a third to $14.7 million, producing adjusted earnings of $0.26 per share.
Mercury CEO Mark Aslett argued that the company expects continued sales growth, sporting record backlog figures. Despite customer funding delays and supply chain challenges, Mercury sees itself positioned well to benefit from higher defense spending both in the U.S. and internationally.
However, what investors really liked was that Mercury decided to initiate a review of strategic alternatives, which is consistent with what activist investors like Starboard Value and Jana Partners have called for. The review is no guarantee of future action, but it nevertheless shows at least that Mercury is listening to concerns and looking to get the stock moving higher.
