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

Superior Micro Gadgets 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 revenue 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 might 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 had been higher than what rival Intel reported. Prior to now couple of years, Intel has additionally came upon each the chip design facet and in manufacturing, the place it has misplaced its technological benefit to rivals equivalent to TSMC, which makes each processors and graphics chips for AMD. Consequently, AMD has been making historic market share features for the previous three years.

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 had been $6.55 billion, up 70%.

“We delivered our eighth straight quarter of file income based mostly on our robust execution and expanded product portfolio,” stated AMD CEO Lisa Su, in a press release. “Every of our segments grew considerably year-over-year, led by increased gross sales of our information heart and embedded merchandise. We see continued development within the again half of the yr 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 technique to keep aggressive and benefit from 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 count on AMD to report earnings per share of $1.09 on revenues of $6.82 billion.

AMD stated datacenter income was $1.5 billion, up 83% from a yr earlier based mostly on robust gross sales of Epyc server processors. Working revenue was $472 million, in contrast with $204 million a yr in the past, pushed by increased income and offset partially by increased working bills.

In an analyst name, Su stated that Epyc processor demand was robust within the quarter with development throughout cloud and enterprise prospects. 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.

Consumer phase income was $2.2 billion, up 25% from a yr in the past, pushed by Ryzen cellular processor gross sales. Consumer processor common promoting costs elevated because of Ryzen cellular. Working revenue was $676 million, up from $538 million a yr in the past. Su stated that AMD believes it gained consumer processor income for the ninth straight quarter, led by Ryzen cellular.

Gaming phase income was $1.7 billion, pushed by increased semi-custom product gross sales equivalent to chips for the PlayStation 5 and Xbox Collection X/S recreation consoles. Working revenue was $187 million, in comparison with $175 million a yr earlier. It was offset partially by decrease gaming graphics income. AMD stated it’s on monitor to ship its 5nm Ryzen 7000 desktop processors and AM5 later this quarter. AMD expects gaming graphics to be down within the third quarter, however it nonetheless plans to launch its high-end RDNA 3 GPUs later this yr.

Su stated 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 phase income was $1.3 billion, up 2,228% from a yr in the past because of inclusion of the Xilinx acquisition. Working revenue was $641 million, up from $6 million a yr in the past. All different working loss was $1.5 billion, in comparison with $92 million a yr in the past resulting from amortization of intangible belongings associated to the Xilinx acquisition. The corporate stated that it noticed robust development in field-programmable gate array and networking merchandise with cloud and monetary prospects.

AMD stated 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 yr in the past because of development within the datacenter and embedded segments.

For the total yr, AMD estimates income can be $26.3 billion, up 60% from a yr earlier, and gross margins of 54%. Su stated the shopper pull for the 5nm Genoa server CPU may be very robust.

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

Regardless of a tricky macroeconomic atmosphere, Su stated the corporate sees continued development within the second half of the yr, led by next-generation 5nm merchandise coming.