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Advanced Micro Devices reported its revenues and earnings for the first quarter ended March 31 beat expectations, with revenue growing 55% to $5.3 billion on a non-GAAP basis (excluding Xilinx results).
Non-GAAP net income for the quarter was $1.6 billion, or 1.13 cents a share, beating expectations of 91 cents a share on a non-GAAP basis. AMD’s shares are up 4.6% to $95.39 a share in after-hours trading.
The Santa Clara, California-based company continues to benefit from its highly competitive Zen and Zen 2 architectures for processors, which can generate 50% or more better performance per clock cycle than the previous generation. This architecture put AMD ahead of Intel in performance for the first time in a decade, and it has helped the perennial No. 2 PC chipmaker into a fast-growing contender against Intel.
In the past couple of years, Intel has also stumbled on both the chip design side and in manufacturing, where it has lost its technological advantage to rivals such as TSMC, which makes both processors and graphics chips for AMD. As a result, AMD has been making historic market share gains for the past three years.
What’s interesting is AMD has been making these gains amid a historic chip shortage driven by the supply whipsaw from the pandemic and unprecedented demand for electronic goods.
Excluding Xilinx, AMD had record quarterly revenue of $5.3 billion, non-GAAP gross margin of 53% and non-GAAP operating margin of 30%. On a GAAP basis, including Xilinx, revenues were $5.9 billion, up 71%.
“The first quarter marked a significant inflection point in our journey to scale and transform AMD as we delivered record revenue and closed our strategic acquisition of Xilinx,” said AMD CEO Lisa Su, in a statement. “Each of our businesses grew by a significant double-digit percentage year-over-year, led by EPYC server processor revenue more than doubling for the third straight quarter. Demand remains strong for our leadership products, with our increased full-year guidance reflecting higher AMD organic growth and the addition of the growing Xilinx business.”
Intel, meanwhile, has been doubling down on its manufacturing investments as a way to stay competitive and take advantage of the chip boom and supply shortage.
During the quarter, AMD acquired Pensando for $1.9 billion.
“With Pensando, we will further expand our data center solutions capabilities,” said Su, in an analyst call. “Pensando will add a proven team that has developed an industry-leading DPU and software stack already deployed with key customers including IBM, HPE, Microsoft, Oracle and Goldman Sachs.”
Q1 2022 results
As noted, non-GAAP revenue was $5.3 billion, up 55% year-over-year and 10% quarter-over-quarter. That was driven by higher revenue in computer and graphics as well as enterprise, embedded, and semi-custom segments. Su said that AMD believes it grew client processor market share for the 8th straight quarter.
“Although the PC market is experiencing some softness coming off multiple quarters of near-record unit shipments, our focus remains on the premium, gaming and commercial portions of the market where we see strong growth opportunities and expect to continue gaining overall client revenue share,” said Su.
Analysts expected AMD to report earnings per share of 91 cents on revenues of $5.52 billion for the first quarter.
For the current second quarter, analysts expect AMD to report earnings of 99 cents on revenue of $6.38 billion.
Non-GAAP net income was $1.6 billion compared to $642 million a year ago and $1.1 billion in the prior quarter.
Quarterly financial segment summary
Computing and graphics segment revenue was $2.8 billion, up 33% from a year ago and up 8% from the previous quarter. The increases were driven by Ryzen and Radeon chip sales. The quarter-over-quarter increase was driven by Ryzen processor sales. Client processor average selling prices were up year over year, as were graphics processing unit (GPU) chip sales.
Enterprise, embedded, and semi-custom segment revenue was $2.5 billion, up 88% from a year ago and up 13% from the previous quarter.
“Semi-custom sales grew by a significant double digit percentage year-over-year based on strong demand for Sony and Microsoft consoles as well as Valve’s new Steam Deck,” Su said.
For the outlook, AMD expects Q2 2022 revenue to hit $6.5 billion, plus or minus $200 million, up 69% from a year ago and up 10% from the prior quarter.
For the full year, AMD estimates revenue will be $26.3 billion, up 60% from a year earlier, and gross margins of 54%.