AMD Earnings Could Have a Different Message Than Intel’s (Update 2)

This post has been updated to include the new WhisperNumber estimates below, as well as the earnings report inclusion below.

Update 5:15 p.m. Eastern Time: AMD earnings were slightly soft, but the guidance was a disappointment in the report. Our take is that this will continue to be a great turnaround, but this also comes with the admission that it is easy to see why the AMD bulls will feel like they got their horns clipped.

There are many things at work here. A PC recovery is not hurting AMD (and likely helping), but the combined graphics and processor design wins in the XBox One and PlayStation 4 have acted as the next catapult. With the company trying to make inroads into smaller and better chips (into mobile that is) and the other efforts underway, we named this as our technology stock winner that could potentially double in 2014. Shares were closer to $3.50 then, and they are above $4.50 now.

We still think the thesis for a double from the original point remains possible. In a bit of irony, the high short interest in AMD may even act as a friend for turnaround investors betting on the AMD recovery. You can even check out Intel earnings, and look to see the common threads.

Thomson Reuters earnings per share (EPS) estimates are $0.03 (versus a per-share loss of $0.09 a year ago) on a nearly 24% revenue gain to $1.44 billion.

AMD UPDATE from WhisperNumber.com: AMD’s whisper number is $0.07 EPS, four cents ahead of the analysts’ estimate and showing strong confidence from investors. Whispers range from a low of $0.04 to a high of $0.09. WhisperNumber’s email to us said:

AMD has a 43% positive surprise history (having topped the whisper in 22 of the 51 earnings reports for which we have data). The overall average post earnings price move is ‘negative’ (beat the whisper number and see weakness, miss and see weakness) when the company reports earnings.

AMD shares are now up almost 30% since our early February call that it could double. Analysts have remained very mixed on the stock. Consensus estimates for the reports ahead are $0.07 EPS and a 7% revenue gain to $1.57 billion for the third quarter. For 2014, estimates are $0.19 EPS and $5.98 billion.

AMD shares were down 3% at $4.51 in mid-day trading Thursday. The drop most likely is simply traders getting out of big profits in case AMD has any negative surprises, or in case there are not many positive views for the coming quarter. This is the summer, so technology investors have learned to expect some weakness from the second to third quarter.

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