AMD tops $5 billion in revenue for first time, stock pops as annual forecast increased

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Advanced Micro Devices Inc. The shares rallied in the extended session Tuesday after the chip maker easily topped $5 billion in quarterly revenue for the first time and executives hiked their outlook for the year.

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AMD AMD,
+1.44%
reported first-quarter net income of $786 million, or 56 cents a share, compared with $555 million, or 45 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $1.13 a share, compared with 52 cents a share in the year-ago period.

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This marks the first reported quarter of earnings since the company closed its acquisition of Xilinx Inc. on Feb. 14, so quarterly results include a partial contribution from the business, which was not included in AMD’s guidance.

Revenue soared to a record $5.89 billion, the first time the company has ever cleared $5 billion in sales for a quarter, up from $3.45 billion in the year-ago quarter. Without Xilinx, AMD said quarterly revenue came in at about $5.3 billion.

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Analysts surveyed by FactSet had forecast 91 cents a share on revenue of $5.01 billion, based on AMD’s forecast of $4.9 billion and $5.1 billion.

Shares rose as much as 5% after hours, following a 1.4% rise in the regular session to close at $91.13.

Gross margins came in at 48% for the first quarter, up from 46% in the year-ago quarter, but down 50% from the fourth quarter. Without Xilinx, AMD’s gross margin was 51%. In comparison, Intel Corp. INTC,
+0.22%
reported first-quarter gross margins 53.1% on a non-GAAP basis, compared with 58.8% a year ago.

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“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 Chief Executive Lisa Su in a statement. “Each of our businesses grew by a significant double digit percentage year-over-year, led by EPYC server processor revenue more than doubling for the third straight quarter. Demand remains strong for our leadership products, with our increased full-year guidance reflecting higher AMD organic growth and the addition of the growing Xilinx business.”

AMD said sales from its computing and graphics segment rose 33% to $2.8 billion from a year ago, while enterprise, embedded and semi custom group sales, aka the data-center and console segment, soared 88% to $2.5 billion from the year-ago period.

Analysts had forecast $2.67 billion in sales from computing and graphics, and $2.35 billion from the enterprise, embedded and semi custom group.

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AMD forecast revenue of $6.3 billion to $6.7 billion for the second quarter, while hiking its revenue forecast to about $26.3 billion for the year, and its gross margin forecast to 54% for the year.

Back in February, AMD forecast gross margins of 51% for 2022, and revenue of about $21.5 billion. At that time, Wall Street analysts had a consensus $19.29 billion.

Currently, analysts estimate earnings of 95 cents a share on revenue of $5.14 billion for the second quarter, and $4 a share on revenue of $21.48 billion for the year.

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So far, the chip sector has been handing in mixed results. Intel doubled down on its bullish 2022 outlook even though the current quarter is showing signs of weakness and Wall Street is skeptical. Qualcomm Inc.’s QCOM,
-0.70%
outlook was also bullish, but analysts could see support in the short term given strength in its handset business.

Late Monday, NXP Semiconductors NV NXPI,
+0.60%,
which has a large presence in the auto chip market, offered a bullish forecast citing demand that outstripped supply, while Texas Instruments Inc. TXN,
-0.84%,
which also has a big foot print in the auto market played it safe with a cautious outlook believing COVID lockdowns in China will affect the manufacturing operations of its customers. Meanwhile, chip-equipment makers Lam Research Corp. LRCX,
+1.27%,
KLA Corp. KLAC,
+2.25%
and ASML Holding NV ASML,
+0.56%
all reported that supply-chain problems are hampering sales in a high-demand environment.

Meanwhile, AMD shares are firmly in bear market territory, 44% off their closing high of $161.91 set on Nov. 29, and 16% above their price 12 months ago. By comparison, the PHLX Semiconductor Index SOX,
+0.75%
is down less than 1% from 12 months ago, while the S&P 500 index SPX,
+0.48%
is also down less than 1%, and the tech-heavy Nasdaq Composite Index comp,
+0.22%
has fallen nearly 10%.

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Credit: www.marketwatch.com /

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