AMD still off sharply as downgrades arrive; Nvidia also lower

|By:, SA News Editor

In addition to offering soft Q3 guidance, AMD (AMD -17.5%) stated on its CC (transcript) its expects Q3 to be this year's "peak quarter" for console APU shipments.

FBR, which has cut shares to Market Perform, calls this "most surprising," given console APU shipments rose sharply in Q4 last year (as the Xbox One/PS4 launched).

It thinks AMD might benefit down the line from a design win for Nintendo's next-gen 3DS, but only sees this boosting EPS by $0.04. The firm is also concerned inventory rose 10% Q/Q to a new all-time high.

When pressed in the Q&A about what his console remarks imply for Q4 sales, CEO Rory Read declined to offer a forecast. He did, however, state PC-related sales are expected to rise in Q4 (in-line with normal seasonality).

BofA/Merrill, which has cut shares to Underperform, argues AMD's PC CPU/GPU ops (have seen share losses to Intel/Nvidia) remain "a material headwind." The firms adds light exposure to enterprise PCs (outperforming in 2014) and certain low-end PC segments seeing strong growth (such as Chromebooks) are also issues.

Raymond James is still bullish: Though thinking management should've communicated console trends better, it believes AMD continues to execute well, and suspects there's an "element of prudence" to Microsoft/Sony's build activity.

Nvidia (NVDA -3.9%) is off in sympathy. Read stated on the CC AMD saw a decline in high-end GPU shipments to graphics card channels - Digitimes previously reported something similar - as demand from cryptocurrency miners abated." Shipments are expected to rise in Q3.