AMD reports all-around record performance in beat-and-rise Q1, stock rallies

Advanced Micro Devices, Inc. amd Reported first quarter revenue and non-GAAP net income comfortably beat estimates.

The chipmaker’s results reflect across-the-board strength, led by higher Ryzen and EPYC processor sales and solid semi-custom revenue. The company raised its full-year revenue guidance, citing strong contributions from Xilinx and the server and semi-custom segments.

AMD’s Key Q1 Metrics: AMD reported first-quarter non-GAAP earnings per share of $1.13, which exceeded the 91-percent consensus estimate. That compared to 52 cents per share in the year-ago quarter and 92 cents per share in the December quarter.

Revenue came in at a record $5.89 billion, representing 71% year-over-year growth and 22% sequential growth. AMD’s topline exceeded the consensus estimate of $5.52 billion and the company’s guidance of $5 billion, plus or minus $100 million.

Excluding Xilinx’s contribution, revenue was $5.33 billion. The company completed its acquisition of Xilinx in mid-February.

rival Intel Corporation INTC Revenue declined 7% year-over-year last week, but met expectations on both the top and bottom line.

AMD’s GAAP gross margin declined from 50% to 48% in the fourth quarter of 2021, the company attributed to declining intangible assets amortization and acquisition-related costs. Non-GAAP gross margin, however, rose 660 basis points year-over-year and 240 basis points quarter-over-quarter to 53%.

Excluding Xilinx, non-GAAP gross margin was 51%.

“The first quarter marked an important inflection point in our journey to scale and transform AMD as we delivered record revenue and closed our strategic acquisition of Xilinx,” said AMD Chair and CEO. Lisa Su.

AMD generated cash from operations of $995 million and free cash flow of $924 million, both representing records.

AMD’s segmented performance: The Santa Clara, California-based chipmaker reported record revenue for two of its business segments, namely computing and graphics and enterprise, embedded and semi-custom.

AMD attributed the strength in computing and graphics segments to sales of Ryzen and Radeon processors. GPU average selling price increased year-over-year due to sales of higher-end Radeon processors, while sequentially, it fell due to a lower mix of data center GPU revenues. Operating income from the segment was a record $723 million.

Higher EPYC server processor sales, semi-custom and embedded product sales increased Enterprise, Embedded and Semi-custom segment revenue. The segment generated operating income of $881 million.

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Forward Outlook: AMD guided for $6.5 billion in second-quarter revenue, plus or minus $200 million. Consensus estimates call for second-quarter earnings of 99 cents per share on revenue of $6.38 billion.

AMD raised its full-year revenue guidance from $21.5 billion to $26.3 billion, ahead of the consensus of $25.15 billion. The company expects non-GAAP gross margin to improve to 54%.

Intel issued a softer guidance for the second quarter, citing inventory challenges in the wake of the lockdown and inflation in China.

Earnings Call Focal Points: When Su and her executive team host the earnings call, AMD investors will want to find out how supply chain disruptions will affect the company’s business going forward.

Rosenblatt Securities Analyst Hans Mossmann The company is expected to provide insight into PC and data center demand and intra-quarter revenue contribution from the recent Xilinx acquisition.

AMD Stock Take: AMD’s shares are down nearly 38% year-over-year, clearly underperforming Invesco QQQ Trust QQQ, The latter, considered a proxy for blue-chip technical performance, has fallen by more than 20% during the same period.

The stock recently bounced off the $84 support level. On the upside, the stock has resistance near $99.40. To make a meaningful move above that the stock has surpassed the psychological resistance of $100.

The average analyst price target for AMD shares, according to TipRanks, is $145.23, which suggests a probability of more than 60%.

AMD’s shares rose 4.22% to $94.98, according to data from Benzingapro. The stock closed the regular session up 1.44% at $91.13.

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