Chipmaker Advanced Micro Devices Inc on Thursday provided third-quarter revenue estimates that were about a billion dollars less than previously forecast, signaling the chip slump could be much worse than expected.

AMD shares dropped 4% in after hours trading, dragging down shares of Nvidia Corp and Intel Corp by over 2%.

"The PC market weakened significantly in the quarter," Chief Executive Officer Lisa Su said in a statement, adding that macroeconomic conditions drove PC demand lower than expected.

"I think AMD is showing that nobody is safe from the post-pandemic PC downturn, and those inventory corrections are also impacting the company," said Anshel Sag, chip analyst at Moor Insights & Strategy. "Overall, this looks to be more of a cyclical correction within a single, albeit large, business unit rather than a structural or strategic one."

Su said AMD's data center, embedded, and gaming segments maintained strong growth.

The company said it expects third-quarter revenue of about $5.6 billion. That compares with its forecast in August of $6.7 billion, plus or minus $200 million.

AMD said its earnings will be released Nov. 1.

  - Reuters