Lisa Su, President and Chief Executive Officer of Advanced Micro Devices (AMD), holds a 3rd generation Ryzen desktop processor during a keynote session at the 2019 Consumer Electronics Show (CES) in Las Vegas speaks on January 9, 2019.
David Paul Morris | Bloomberg | Getty Images
AMD stock remained unchanged in expanded trading after the company announced sales and earnings that exceeded Wall Street’s already high expectations of the chipmaker.
Here’s how AMD responded to Wall Street expectations:
- EPS: Adjusted for $ 0.52 versus $ 0.47 by refinitive consensus estimates
- revenue: $ 3.24 billion versus $ 3.03 billion by refinitive consensus estimates
AMD also released a strong forecast for the current quarter of between $ 3.1 billion and $ 3.3 billion, and expects revenue to grow 37% in 2021. However, AMD’s revenue in 2020 increased 45% year over year .
The biggest highlight for AMD this quarter was the embedded segment, which grew 176% year over year to $ 1.28 billion. This department 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 refers to as the console chip business, and said there was strong demand for the current generation of Sony and Microsoft consoles.
AMD’s business in sales of processors and graphics chips for personal computers, known as Computing & Graphics, grew 18% year over year to $ 1.96 billion. This was due to an increase in processor sales, said AMD.
AMD brought new processors and graphics chips onto the market last fall, all of which were sold out. Sales of desktop CPUs increased annually, suggesting that the Ryzen CPUs are in fierce competition with Intel for market share.
At the start of trading on Tuesday, AMD shares rose 85% over the past year. This is partly due to investor enthusiasm for semiconductors, but also because AMD gained a technological edge over its main competitor Intel over the past year. Intel was down less than 1% in expanded trading.
AMD is outsourcing manufacturing to partners like Taiwan’s TSMC, while Intel remains committed to manufacturing its best chips. This allows AMD to access more advanced chip manufacturing using what is known as a 5-nanometer process, which results in denser and more efficient chips.
In October, AMD announced that it planned to purchase Xilinix, valued at $ 35 billion and should be completed by the end of this year. Xilinix focuses on specialty chips that, compared to AMD’s general purpose processors, can efficiently handle tasks like compressing video. The acquisition is expected to give AMD more firepower to compete with Intel in the data center chip market.