Advanced Micro Devices (AMD) (AMD) - Get Advanced Micro Devices, Inc. Reportand Nvidia (NVDA) - Get NVIDIA Corporation Reportpass a crucial test in this month of May.
Since the beginning of the year, the two chipmakers have experienced a lot of turmoil on the stock market.
Despite revealing solid foundations, investors have fled technology and semiconductor and microprocessor companies.
The reason? A lack of chips to supply their products.
As they search for the correct materials, manufacturers have to stop assembly of certain models for an absence of parts. Electronics, IT, and other industries have also suffered, as they have struggled for the right materials.
According to industry figures, this chip conflict will last until at least 2024. However, semiconductor manufacturers did not take advantage of the previous boom times, ending the golden period of 2021.
Sharp Drop in AMD and Nvidia Stocks
AMD''s stock has dropped by 37.1% since December 31. In the first quarter of 2022, AMD''s stock has decreased by 24.01%.
The decline in Nvidia shares has dropped by 33.6% from December to 28.4% for the first quarter ended on March 31.
AMD''s stock is trading at the time of writing at $90.50, down from $143.90 on December 31.
On December 31, the current Nvidia stock price was $195.33 against $294.06.
Nvidia, AMD, and Intel sell graphics processing units and CPUs to gamers.
Aside from their vast expertise in cloud computing, self-driving automobiles, the metaverse, artificial intelligence, and other goods, they are well-known producers of semiconductors and systems.
This month, the two firms will publish their quarterly results after months of uncertainty.
AMD is set to close on May 3 but investors will then wait until May 25 to see how Nvidia performed in the first quarter of its fiscal year 2022.
AMD will report a significant increase in profit and revenue, but at a slower pace than previously reported. In Q1, FY 2021, analysts forecast EPS of $0.91 vs. $0.52. Revenue is also expected to increase.
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AMD''s growth plans are being discussed by investors. Pensando Systems Inc., a provider of networking and security services, was purchased for $1.9 billion in April.
This transaction is expected to provide AMD with a boost in the data center industry, resulting in a high-growth market.
"The Pensando team demonstrates world-class experience and a proven track record of innovation at the chip, software, and platform level, which further enhances our ability to offer leadership solutions to our cloud, enterprise, and edge customers," Lisa Su, the chairman of AMD, said in a press release.
Pensandos products are already being deployed at a wide range across cloud and enterprise customers, including Goldman Sachs, IBM Cloud, Microsoft Azure, and Oracle Cloud.
Will a Good Surprise Be Enough?
Investors want to include a subdivided into two segments: Enterprise, Embedded, and Semi-Custom, which includes server and embedded processors rather than processors for desktops and laptops.
This division is expected to continue to improve. Investors are concerned about any sign of a slowdown.
AMD has managed in recent quarters to pleasantly surprise investors. This time, even a positive surprise is not enough given the context.
Concerns about the recession are causing demand to plummet, and experts believe it''s possible that consumers will lower expenditure and lower purchases.
This is especially possible as consumers and companies concentrated on technological tools, especially PCs during the epidemic.
These sources suggest that factors cause a downturn in the PC market. In general, many investors are betting on a slowdown in hardware sales in 2022 and 2023.
Nvidia is the chip manufacturer that might be the most susceptible to these growth fears, because it generates a lot of its revenue from video gaming equipment.
If households reverse purchases, analysts believe the company might be hit hard.
Investors are linking Nvidia''s future to growth in the crypto space, especially in the ethereum blockchain.
Ethereum''s initial cryptocurrency, ether, is expected to be going to a new version and a new transaction validation mechanism.
The rise in GPUs is expected to reduce the number of ether used, and GPUs are considered one of Nvidia''s cash cows.