Lisa Su, president and chief executive officer of Advanced Micro Devices (AMD), has a 3rd generation Ryzen desktop processor as she speaks at a keynote session at the Consumer Electronics Show (CES) 2019 in Las Vegas, January 9, 2019.
David Paul Morris | Bloomberg | Getty Images
AMD shares held steady in long-term trading after the company announced sales and earnings that exceeded Wall Street’s already high expectations for the chipmaker.
Here’s how AMD fared against Wall Street’s expectations:
- EPS: $ 0.52, adjusted, versus $ 0.47 by Refinitiv consensus estimates
- Revenue: $ 3.24 billion, versus $ 3.03 billion according to Refinitiv consensus estimates
AMD also gave a strong forecast for the current quarter of between $ 3.1 billion and $ 3.3 billion and said it expects revenue to grow 37% by 2021. AMD sales in 2020 were up 45% year-on-year.
The biggest highlight for AMD this quarter was the business segment which was up 176% year over year and was up 13% from the previous quarter to $ 1.28 billion. That division sells server chips as well as CPUs and graphics processors for game consoles such as the Sony PS5 and Microsoft Xbox One.
AMD attributed the growth to its semi-custom sales, which it calls its console chip business, and said there was high demand for the current generation of Sony and Microsoft consoles. It also said its server revenues grew sequentially.
AMD’s sales of processors and graphics chips for PC, which it calls Computing & Graphics, were up 18% year-over-year to $ 1.96 billion. That was driven by an increase in processor sales, AMD said.
AMD launched new processors and graphics chips last fall that keep selling out. It said its desktop CPU revenues were growing year on year, suggesting that its Ryzen CPUs are fiercely competing with Intel for market share.
At the start of trading on Tuesday, shares of AMD were up 85% over the past year. That’s partly because of investors’ enthusiasm for semiconductors, but it’s also because AMD has gained a technological lead over its main competitor, Intel, in the past year. Intel was flat in long-term trading.
AMD is outsourcing production to partners, including Taiwanese TSMC, while Intel is still committed to manufacturing the best chips. This gave AMD access to more advanced chip manufacturing on a so-called 5-nanometer process, making chips denser and more efficient.
In October, AMD announced that it intended to buy Xilinix in a $ 35 billion deal due to close by the end of this year. Xilinix focuses on specialized chips that can efficiently handle tasks 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.