AMD (AMD  ) shares were flat following the company's Q3 earnings which showed a miss on the top and bottom lines as it's negatively affected by slowing enterprise spending, a decline in PC sales, and weakness in video games and cryptocurrencies. However, the company did grow revenue by 29% which is notable in this environment with tough comps.

Overall, AMD shares are down 58% YTD and off by 63% from it's all-time high late in 2021. Notably, the company has retraced nearly its entire advance from the March 2020 lows. The combination of decline in share price and continued earnings growth has resulted in attractive valuations with a forward P/E of 15.

Inside the Numbers

In Q3, AMD reported $0.67 per share in adjusted earnings which fell short of expectations of $0.68 per share in adjusted earnings. Revenue was up 29% but also missed expectations at $5.57 billion vs $5.62 billion.

The company had already warned earlier in October that weaker PC sales was affecting chip shipments which caused a 14% decline in the stock. It sees another poor quarter for PC sales in Q4.

For the full year, AMD forecasts $23.5 billion in revenue which is meaningfully lower than its $26.3 billion forecast from August. It also lowered its gross margin outlook to 52% from 54%.

The Data Center segment contributed $1.61 billion in revenue, a 45% increase but slightly below estimates. This includes revenue from recent acquisitions - Xilinx and Pensando. It's seen healthy demand for its new server chips and is expecting a strong reception for its new Epyc data center chips which will launch this month.

In total, cloud revenue doubled, while revenue from server makers targeting big companies was down sequentially. The company noted a slowing in the sales cycle and more conservative budgets.

One reason for the stock's strength despite the lackluster results is that all segments of the company are continuing to grow, other than PC sales. And, weakness in PC sales has already been priced in given that it's largely a consequence of massive spending during the period of stimulus checks and work and learn from home. Additionally, this segment typically has the lowest margins.