AMD shares fall more than 7% on weak outlook

Lisa Su, president and CEO of Advanced Micro Devices (AMD), holds a third-generation Ryzen desktop processor as she speaks during a keynote session at the 2019 Consumer Electronics Show (CES) in Las Vegas, Jan. 9, 2019 .

David Paul Morris | Bloomberg | Getty Images

AMD shares fell more than 7% on Friday as investors digested the semiconductor’s disappointing preliminary third-quarter results on Thursday that were well below its initial guidance.

The chipmaker cut its third-quarter sales forecast on Thursday, blaming a bigger-than-expected drop in the personal computer market and supply chain problems.

AMD now expects preliminary quarterly revenue of about $5.6 billion thanks to “reduced processor shipments.” That’s more than $1 billion below the $6.7 billion it had previously forecast as the midpoint of its revenue expectations for the quarter.

The company also said its non-GAAP gross margin is expected to come in at around 50%, while gross margin was previously expected to be around 54%.

Several firms, including Piper Sandler, Stifel, KeyBanc Capital Markets and Mizuho Securities, cut their price targets for AMD in notes to clients on Friday, though each maintained a buy or overweight rating.

Shares of other chipmakers com Intel i Nvidia were also down, each around 4%, as weak PC demand and supply chain issues could weigh on other semiconductor players.

WATCH: AMD’s Q3 cut was deeper than market expected, says Bernstein’s Stacy Rasgon

AMD's Q3 Cut Was Deeper Than Market Expected, Bernstein's Stacy Rasgon Says

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