AMD revenue forecast exceeded market expectations, server revenue doubled

AMD reported second-quarter results this week, with revenue and EPS exceeding analysts’ expectations and guidance for the current quarter also higher. As a result, after the close of trading in the US, AMD’s stock price rose 7.74%. In the server segment, the company’s revenue more than doubled year-on-year.

Image source: AMD

AMD’s revenue in the last quarter increased by 9% to $5.8 billion year over year and by 7% sequentially. The profit margin increased from 46 to 49% year-on-year. Operating profit increased to $269 million, whereas a year ago the company ended the period with operating losses of $20 million. Accordingly, it was able to increase its operating profit margin from 0 to 5%. Net profit increased by 881% to $265 million.

As AMD CEO Lisa Su explained at the reporting event, in the second quarter the company received record revenue in the data center segment. In fact, it grew by 115% year-on-year to $2.8 billion. The company explains this not only by a sharp increase in shipments of Instinct accelerators, but also by an increase in sales of fourth-generation EPYC processors.

Operating profit in the segment increased from $147 to $743 million, and the operating profit margin increased from 11 to 26%. In the second quarter, the company was able to generate more than $1 billion in revenue from Instinct accelerators alone, which was higher than AMD’s own expectations. Now the company believes that this year it will be able to earn more than $4.5 billion from the sale of GPUs in the server segment. Three months ago, let us remind you, this level did not exceed $4 billion. According to Lisa Su, the shortage of components in this area continues, and clients intend to invest serious money in artificial intelligence.

The client segment also did not let the company down; in this area, revenue increased almost one and a half times to $1.5 billion, mainly due to processors of the Ryzen family. Operating profit of $89 million replaced year-on-year operating losses of $69 million, and the operating profit margin reached 6%.

The gaming segment showed a 59% year-on-year decline in revenue to $0.6 billion, primarily due to lower demand for components for gaming consoles, which are now in the mature phase of their life cycle. Operating profit in the gaming segment decreased almost threefold to $77 million, and the operating profit margin decreased from 14 to 12%. The embedded solutions segment reduced revenue by 41% to $0.9 million, largely due to the retention of product inventories on the customer side. Operating profit more than halved to $345 million, and the operating profit margin fell from 52 to 40%.

For the current quarter, AMD expects total revenue of $6.7 billion, while analysts expect $6.61 billion.