Shares of Advanced Micro Devices (AMD) surged in after-hours trading after the chip maker reported its Q2 earnings results. Earnings per share came in at $0.69, which beat analysts’ consensus estimate of $0.68 per share. Sales increased by 9% year-over-year, with revenue hitting $5.84 billion. This beat analysts’ expectations of $5.72 billion.
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This increase in sales was primarily driven by its Data Center segment, which saw revenue jump by 115% year-over-year to $2.8 billion. The main cause of this jump was a steep increase in Instinct GPU shipments, along with strong growth in 4th Generation AMD EPYC CPU sales. It’s worth noting that the company’s Data Center segment is its largest revenue driver, as it makes up more than 28% of its total sales.
However, Gaming, its second-largest segment, saw a 59% year-over-year decrease to $648 million. This was due to a decrease in semi-custom revenue, which involves designing and manufacturing customized chips tailored to the specific needs of individual customers.
Looking forward, management now expects revenue for Q3 2024 to be between $6.4 billion and $7 billion, or $6.7 billion at the midpoint. For reference, analysts were expecting $6.61 billion in revenue.
Is AMD a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on AMD stock based on 28 Buys, six Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 20% rally in its share price over the past year, the average AMD price target of $194.93 per share implies 41.82% upside potential. However, it’s worth noting that estimates will likely change following today’s earnings report.
