AMD beats expectations and grows its revenue on strong data center chip sales

Advanced Micro Devices Inc. stunned Wall Road at present because it beat expectations on gross sales and revenue in its fourth-quarter monetary outcomes, because of energy in its knowledge heart division.

However the firm warned analysts that it’s anticipating a ten% income decline for the present quarter. The chipmaker’s inventory rose 2% in after-hours buying and selling nonetheless.

AMD reported earnings earlier than sure prices similar to inventory compensation of 69 cents per share, beating the analyst consensus estimate of 67 cents. Income for the interval rose 16%, to $5.6 billion, simply forward of the $5.5 billion anticipated. All advised, that resulted in a slight internet revenue of $21 million for the quarter.

For the complete yr, AMD delivered $23.6 billion in income, up 44% from a yr earlier.

AMD Chair and Chief Government Lisa Su (pictured) mentioned 2022 was a robust yr for the corporate, delivering report income and the perfect development in its historical past, regardless of a weak private pc setting within the second half of the yr. “We accelerated our knowledge heart momentum and closed our strategic acquisition of Xilinx, considerably diversifying our enterprise and strengthening our monetary mannequin,” Su mentioned. “Though the demand setting is combined, we’re assured in our means to achieve market share in 2023 and ship long-term development based mostly on our differentiated product portfolio.”

For the present quarter, AMD is guiding to anticipated gross sales of $5.3 billion, barely decrease than Wall Road’s estimate of $5.47 billion. That implies a income decline of about 10%. The corporate additionally forecast an adjusted gross margin of about 50%.

AMD’s newest outcomes come at a time when lots of its rivals within the semiconductor area are struggling amid decrease demand for shopper electronics. Consequently, system makers have held again on shopping for new chips as they try and dump their present inventories.

Final week, AMD’s major competitor Intel Corp. reported disastrous fourth-quarter results that included a forecast for a 40% gross sales decline within the coming quarter. Simply yesterday, Samsung Electronics Co. Ltd. reported that its reminiscence chip enterprise suffered an unimaginable 90% drop in sales within the fourth quarter.

AMD mentioned it was in a position to proceed rising because of the robust efficiency of its embedded and knowledge heart companies, which helped offset the weak demand that hit its consumer and gaming models. Gross sales inside AMD’s knowledge heart section jumped 42% from a yr earlier, to $1.7 billion, suggesting it might have taken some market share from Intel, whereas the embedded section noticed income soar 19-fold, to $1.4 billion, following its acquisition of Xilinx Inc.

Nevertheless, AMD’s consumer computing group, which accounts for processors for private computer systems, noticed income hunch 51% from a yr earlier, to simply $903 million. Su advised analysts on a convention name that most of the firm’s prospects have an excessive amount of stock readily available, and that they’re struggling to shift it amid a slowdown in PC gross sales. The analyst agency Gartner Inc. lately reported that fourth-quarter worldwide PC shipments declined by 28.5%, the largest fall because the agency began following shipments within the mid-Nineteen Nineties.

Su added that the corporate believes the PC market will decline once more in 2023, by round 10%.

AMD’s gaming enterprise, which sells graphics processing models and chips for video video games consoles and gaming PCs, noticed income fall 7%, to $1.6 billion. The drop in income was attributed to decrease gross sales of GPUs, however was offset to an extent by “semi-custom” gross sales, which refers to chips that energy consoles such because the Sony PlayStation 5.

Picture: AMD Global/Flickr