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AMD beats Q2 earnings with income of $6.55B, up 70%

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Advanced Micro Devices reported its revenues and earnings for the second quarter ended June 30 beat expectations, with income rising 70% to $6.55 billion on a GAAP foundation.

Non-GAAP web earnings for the quarter was $1.707 billion, or $1.05 a share, beating expectations of $1.05 a share on revenues of $6.5 billion on a non-GAAP foundation. AMD’s shares are down 3.7% to $95.55 a share in after-hours buying and selling.

The Santa Clara, California-based firm continues to learn from its extremely aggressive Zen and Zen 2 architectures for processors, which may generate 50% or extra higher efficiency per clock cycle than the earlier era. This structure put AMD forward of Intel in efficiency for the primary time in a decade, and it has helped the perennial No. 2 PC chipmaker right into a fast-growing contender in opposition to Intel.

The outcomes have been higher than what rival Intel reported. Prior to now couple of years, Intel has additionally discovered each the chip design facet and in manufacturing, the place it has misplaced its technological benefit to rivals comparable to TSMC, which makes each processors and graphics chips for AMD. In consequence, AMD has been making historic market share features for the previous three years.

The HPE Cray Frontier uses AMD Epyc processors.
The HPE Cray Frontier makes use of AMD Epyc processors.

What’s fascinating is AMD has been making these features amid a historic chip scarcity pushed by the provision whipsaw from the pandemic and unprecedented demand for digital items.

AMD had quarterly income of $6.55 billion, non-GAAP gross margin of 54% and non-GAAP working margin of 30%. On a GAAP foundation, revenues have been $6.55 billion, up 70%.

“We delivered our eighth straight quarter of report income primarily based on our sturdy execution and expanded product portfolio,” mentioned AMD CEO Lisa Su, in a press release. “Every of our segments grew considerably year-over-year, led by greater gross sales of our knowledge heart and embedded merchandise. We see continued development within the again half of the 12 months highlighted by our subsequent era 5nm product shipments and supported by our diversified enterprise mannequin.”

Intel, in the meantime, has been doubling down on its manufacturing investments as a approach to keep aggressive and reap the benefits of the chip growth and provide scarcity.

Analysts anticipated AMD to report earnings per share of $1.03 on revenues of $6.53 billion for the second quarter ended June 30. For the third quarter ending September 30, analysts anticipate AMD to report earnings per share of $1.09 on revenues of $6.82 billion.

AMD mentioned datacenter income was $1.5 billion, up 83% from a 12 months earlier primarily based on sturdy gross sales of Epyc server processors. Working earnings was $472 million, in contrast with $204 million a 12 months in the past, pushed by greater income and offset partially by greater working bills.

In an analyst name, Su mentioned that Epyc processor demand was sturdy within the quarter with development throughout cloud and enterprise clients. In cloud, greater than 60 new situations powered by third-generation Epyc processors launched within the quarter from AWS, Baidu, Google, Microsoft Azure, and Oracle.

Shopper section income was $2.2 billion, up 25% from a 12 months in the past, pushed by Ryzen cell processor gross sales. Shopper processor common promoting costs elevated because of Ryzen cell. Working earnings was $676 million, up from $538 million a 12 months in the past. Su mentioned that AMD believes it gained shopper processor income for the ninth straight quarter, led by Ryzen cell.

Gaming section income was $1.7 billion, pushed by greater semi-custom product gross sales comparable to chips for the PlayStation 5 and Xbox Sequence X/S recreation consoles. Working earnings was $187 million, in comparison with $175 million a 12 months earlier. It was offset partially by decrease gaming graphics income. AMD mentioned it’s on observe to ship its 5nm Ryzen 7000 desktop processors and AM5 later this quarter. AMD expects gaming graphics to be down within the third quarter, nevertheless it nonetheless plans to launch its high-end RDNA 3 GPUs later this 12 months.

Su mentioned that AMD made progress with its datacenter GPU footprint within the quarter, highlighted by the AMD-based Frontier supercomputer hitting the No. 1 spot on the record of the world’s quickest supercomputers.

Embedded section income was $1.3 billion, up 2,228% from a 12 months in the past because of inclusion of the Xilinx acquisition. Working earnings was $641 million, up from $6 million a 12 months in the past. All different working loss was $1.5 billion, in comparison with $92 million a 12 months in the past as a result of amortization of intangible belongings associated to the Xilinx acquisition. The corporate mentioned that it noticed sturdy development in field-programmable gate array and networking merchandise with cloud and monetary clients.

AMD mentioned it’s engaged on its Zen 4 and Zen 5 core (coming in 2024) architectures.

For the outlook, AMD expects Q3 2022 income to hit $6.7 billion, plus or minus $200 million, up 55% from a 12 months in the past because of development within the datacenter and embedded segments.

For the total 12 months, AMD estimates income will probably be $26.3 billion, up 60% from a 12 months earlier, and gross margins of 54%. Su mentioned the shopper pull for the 5nm Genoa server CPU could be very sturdy.

“Our work over the past a number of years has positioned AMD on a major development trajectory,” Su mentioned. “AMD has by no means been stronger, and the markets for our merchandise have by no means been as massive or numerous.”

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