Lisa Su, president and CEO of Advanced Micro Devices (AMD), has a third-generation Ryzen desktop processor while speaking during a masterful session at the 2019 Consumer Electronics Show (CES) in Las Vegas on January 9, 2019 .
David Paul Morris | Bloomberg | Getty Images
AMD shares remained flat during the extended trading period after the company announced revenue and earnings that exceeded Wall Street’s expectations for the chip maker.
Here’s how AMD met Wall Street expectations:
- EPS: $ 0.52, adjusted, versus $ 0.47, according to Refinitiv consensus estimates
- Income: $ 3,242 million, compared to $ 3.03 million according to Refinitiv consensus estimates
AMD also provided a strong forecast for the current quarter of $ 3.1 billion to $ 3.3 billion and said it expects 2021 revenue to grow 37%. AMD’s revenue in 2020 increased 45% year-over-year.
AMD’s highlight this quarter was its business segment, which rose 176% year-over-year and 13% more than last quarter, to $ 1.282 billion. This division sells server chips as well as CPUs and graphics processors for gaming consoles such as the Sony PS5 and Microsoft Xbox One.
AMD attributed the growth to its semi-custom sales, which is what it calls its console chip business, and said there was strong demand for the current generation of Sony and Microsoft consoles. He also said server revenue was growing sequentially.
AMD’s processors and graphics chips for business, which it calls Computers and Graphics, rose 18 percent year-on-year to $ 1.96 billion. This was driven by an increase in processor sales, AMD said.
AMD released new processors and graphics chips last fall that have been steadily depleted. He said his desktop CPU revenue was growing annually, suggesting that his Ryzen CPUs are fiercely competing with Intel for market share.
At the start of trading on Tuesday, AMD shares rose 85% over the past year. This is due, in part, to investor enthusiasm for semiconductors, but also because last year AMD gained a technological advantage over its main competitor, Intel. Intel remained in the expanded trade.
AMD outsources its manufacturing to partners, including Taiwan’s TSMC, while Intel continues to bet on manufacturing its best chips. This has allowed AMD to access 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 should close by the end of this year. Xilinix focuses on specialized chips that can efficiently handle tasks such as video compression, 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.