AMD Delivers Stellar Q2 Results, Beats Expectations

Global semiconductor giant Advanced Micro Devices, Inc. (AMD) delivered outstanding second-quarter results with significant growth in sales for all its products, despite the worldwide chip shortage. Shares were up 1.6% in pre-market trading at the time of writing.

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Earnings exploded 250% to $0.63 per share year-over-year and beat the Street’s estimate of $0.54 per share.

Revenue climbed 99% to $3.85 billion compared to the year-ago period and surpassed analysts’ estimates of $3.62 billion. (See Advanced Micro Devices stock charts on TipRanks)

AMD witnessed significant growth across all segments backed by robust sales for desktops, laptops, and processors.

Computing and Graphics revenue grew 65% year-over-year, driven by higher average selling prices (ASP) for both client and graphics processors.

The Enterprise, Embedded, and Semi-Custom segment grew 183% year-over-year, backed by strong demand for its EPYC processors and semi-custom products.

The company’s President and CEO, Lisa Su, said, “We are growing significantly faster than the market with strong demand across all of our businesses. We now expect our 2021 annual revenue to grow by approximately 60 percent year-over-year driven by strong execution and increased customer preference for our leadership products.”

For the third quarter, AMD projects revenues of $4.1 billion (plus or minus $100 million), representing a sequential-quarterly increase of 6%, driven by solid growth in its data center and gaming businesses.

Following the results, Mizuho Securities analyst Vijay Rakesh reiterated a Buy rating on the stock and lifted the price target to $110 (20.8% upside potential) from $107.

Rakesh said, “We continue to see AMD well-positioned, with strong demand
trends underpinning a 7nm/5nm Server chip roadmap ahead of INTC, Milan
ramp in Server/DC driving GMs, a new multi-year gaming console cycle,
and the strategic XLNX acquisition ahead.”

However, the analyst also cautioned that “given the significant PC and work-from-home strength in 2020-21, we believe 2022 could see a more challenging demand environment as many of the consumption stimulus measures are now in the rear-view mirror.”

Overall, the stock has a Strong Buy consensus rating based on 10 Buys and 2 Holds. The average Advanced Micro Devices price target of $110.20 implies 21.1% upside potential to current levels. Shares have gained 34.6% over the past year.