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AMD shares Leap after 1st Quarter Earnings Beat Estimates

Advanced Micro Devices Inc (AMD) shares leaped after its quarterly profit and revenue beat Wall Street estimates.

AMD benefited from higher prices and demand for graphics used in personal computers, gaming consoles, and cryptocurrency mining.

Further, to keep up with rising demand for chips from data centers, AMD has developed newer editions of server processors.

Demand for AMD’s Radeon series remained strong in the first 3 months of the year as new high-quality videogames were released, said Chief Executive Lisa Su.

ryzen chip from amd is used on a motherboard with red lines
Ryzen chips were among the biggest contributors for AMD’s earnings.

“Our financial progress in the 1st quarter is attributable to the ongoing strength of Radeon and Ryzen products as well as continued early contributors from our EPYC products,” said Devinder Kumar, Chief Financial Officer, pointing to AMD’s EPYC line of products and Ryzen PC processors.

With its EPYC chips, AMD has been trying to gain share in an Intel-dominated market. The company expects to have mid-single-digit server chip unit share by the end of the year, Su said.

“I will say, for the 1st-generation EPYC, we’re seeing really nice customer interest, and it’s quite broad,” she said. “And so it is across enterprise as well as the hyperscale customers. And we view this as a multigenerational play, so we’re very excited about what EPYC can do over the next couple of quarters.”

Meanwhile, AMD has continued to enjoy the boom in cryptocurrencies. Graphic chips provide the high computing ability required for mining popular digital currencies such as bitcoin and Ethereum.

Crypto-mining accounted for some 10% of the overall revenue in the 1st quarter, Kumar said.

However, gaming is still the “top priority” of the company, Kumar said.

AMD beats Estimates

AMD reported a net income of $81 million in the 3 months ended March 31, compared with a net loss of $33 million last year.

Excluding one-time items, the company earned 11 cents per share. It topped analysts’ average estimate of 9 cents, according to Thomson Reuters I/B/E/S.

Revenue increased 40% to $1.65 billion, beating forecasts of $1.57 billion. In addition, its key computing and graphics segment climbed 95% to $1.12 billion.

However, AMD’s Enterprise, Embedded and Semi-Custom business fell 12% to $532 million. It was mainly due to a drop in semi-custom revenue, which includes chips customized for game consoles makers. The semi-customer fall is linked to a gain in licensing business that happened in the 1st quarter of last year.

Moreover, the chipmaker reported a forecast that also beat estimates. The company said it’s expecting $1.72 billion in revenue, give or take $50 million, in the 2nd quarter. It was higher than the analyst expectations for sales of $1.58 billion.

AMD shares gained about 10% after closing with a 3.8% drop at $9.71 in New York. It’s down 5.5% this year.

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