Advanced Micro Devices, Inc. reported record first-quarter revenue and non-GAAP net income that comfortably beat estimates.
AMD’s Key Q1 Metrics
AMD reported first-quarter non-GAAP earnings per share of $1.13, exceeding the 91-cent consensus estimate. This compares to the year-ago quarter’s 52 cents and the December quarter’s 92 cents per share.Revenues came in at a record $5.89 billion, representing a 71 percent year-over-year growth and 22 percent sequential increase. 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 the contribution from Xilinx, revenue was at $5.33 billion. The company completed the Xilinx acquisition in mid-February.
Rival Intel Corporation last week reported a 7 percent year-over-year revenue decline, but managed to expectations both on the top and bottom line.
AMD’s GAAP gross margin contracted from 50 percent in the fourth quarter of 2021 to 48 percent, with the company blaming the decline on the amortization of intangible assets and acquisition-related costs. Non-GAAP gross margin, however, expanded 660 basis points year-over-year and by 240 basis points quarter-over-quarter to 53 percent.
Excluding Xilinx, the non-GAAP gross margin was at 51 percent.
“The first quarter marked a significant 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’s Segmental Performance
The Santa Clara, California-based chipmaker reported record revenue for its two business segments, namely Computing & Graphics and Enterprise, Embedded and Semi-Custom.
AMD attributed the strength in Computing & Graphics segment to strong Ryzen and Radeon processor sales. GPU average selling price increased year-over-year due to high-end Radeon processor sales, while sequentially, it fell due to a lower mix of data center GPU revenue. Operating income from the segment stood at a record $723 million.
Forward Outlook
AMD guided to second-quarter revenue of $6.5 billion, plus or minus $200 million. The consensus estimates call for second-quarter earnings of 99 cents per share on revenues of $6.38 billion.AMD lifted 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 percent.
Earnings Call Focal Points
When Su and her executive team host the earnings call, AMD investors may want to find out about how supply chain constraints will impact the company’s businesses going forward.Rosenblatt Securities analyst Hans Mosesmann expects the company to provide insights into PC and data center demand and intra-quarter revenue contribution from the recent Xilinx acquisition.
AMD Stock Take
AMD shares are down about 38 percent in the year-to-period, markedly underperforming the Invesco QQQ Trust. The latter, considered a proxy for blue-chip tech performance, has fallen a more modest 20 percent during the same period.The stock has recently bounced off a support around $84. On the upside the stock has resistance around $99.40. To make a meaningful move above that the stock has go past the psychological resistance of $100.
Average analysts’ price target for AMD shares, according to TipRanks, is $145.23, suggesting over 60 percent upside potential.
AMD shares were rising 4.22 percent to $94.98, according to BenzingaPro data. The stock closed the regular session 1.44 percent higher at $91.13.
