Lisa Su, president and chief executive officer of Advanced Micro Devices (AMD), owns a 3rd generation Ryzen desktop processor while speaking during a presentation session at the Consumer Electronics Show (CES) 2019 in Las Vegas, January 9, 2019.
David Paul Morris | Bloomberg | Getty Images
AMD’s shares were flat in the trading period after the company announced revenue and earnings that exceeded Wall Street’s already high expectations for the chip maker.
Here’s how AMD fared from Wall Street expectations:
- EPS: $ 0.52, adjusted, against $ 0.47 according to Refinitiv’s consensus estimates
- recipe: $ 3.24 billion, against $ 3.03 billion according to Refinitiv’s consensus estimates
AMD also provided a strong forecast for the current quarter between $ 3.1 billion and $ 3.3 billion and said it expects 2021 revenue to grow 37%. AMD’s revenue in 2020 increased 45% year on year.
The biggest highlight for AMD this quarter was its business segment, which grew 176% year over year and 13% over the last quarter, to $ 1.28 billion. This division sells server chips, as well as CPUs and graphics processors for game consoles like the Sony PS5 and Microsoft Xbox One.
AMD attributed the growth to semi-custom sales, which is what it calls its console chip business, and said there is strong demand for the current generation of consoles Sony and Microsoft. He also said that his server revenue grew on a sequential basis.
AMD’s businesses that sell PC graphics processors and chips, which she calls Computing & Graphics, have increased 18% year-over-year to $ 1.96 billion. This was driven by an increase in processor sales, AMD said.
AMD launched new processors and graphics chips last fall that are consistently sold out. She said that desktop CPU revenue grew annually, suggesting that Ryzen CPUs are competing fiercely with Intel for market share.
At the start of trading on Tuesday, AMD’s shares rose 85% from last year. This is partly due to investors’ enthusiasm for semiconductors, but also because, last year, AMD gained a technological advantage over its main competitor, Intel. Intel was stable in protracted negotiations.
AMD outsources its manufacturing to partners, including Taiwan’s TSMC, while Intel is still committed to making its best chips. This allowed AMD to have access to more advanced chip manufacturing in a process called 5 nanometers, which makes the chips denser and more efficient.
In October, AMD announced that it planned to buy Xilinix in a $ 35 billion deal that is expected to close by the end of this year. Xilinix focuses on specialized chips that can handle tasks efficiently such as compressing videos, compared to AMD’s general-purpose processors. The acquisition is expected to give AMD more firepower to compete with Intel in the data center chip market.