AMD boosts the bullsAMD comes in strong with its third quarter report thanks to surging chip demand, exceeding expectations on both earnings and revenue and getting hopes up for the quarter to come.
Advanced Micro Devices released its third quarter earnings on Tuesday, reporting earnings per share of $0.73 on $4.31 billion in revenue compared to expectations of $0.67 in earnings per share and revenue of $4.12 billion. Earnings are up 16% from the same period the year before, and revenue has increased a whopping 54% in that time as the global chip shortage has sent demand surging for AMD products.
The results have been even more impressive to analysts considering rival chip maker Intel’s (INTC) earnings report last week, which saw sales take a major hit amid the shortage. For a while now, AMD has been delivering where Intel can’t, taking over more of the market share with every earnings report. AMD added a cherry on top of its yummy quarter with its fourth quarter guidance – the chip maker is expecting $4.5 billion in sales for the upcoming quarter, ahead of expectations of $4.25 billion, and hopes to report annual growth of 39%. AMD CEO Lisa Su said:
Semi-custom revenue grew sequentially and year-over-year as demand for the latest Microsoft and Sony consoles remains very strong. We expect semi-custom revenue to increase sequentially in the fourth quarter as we further ramp supply to address the ongoing game console demand.
Cowen analyst Matthew Ramsay, who has an outperform rating and a $120 price target on the stock, said:
We continue to monitor the PC market for signs of demand slowing or supply improving. We believe datacenter passing a quarter of AMD’s business could draw investor attention.We remind investors that the most important business for AMD remains datacenter, which we estimate doubled in 2020, with CEO Lisa Su noting she sees the business momentum accelerating in 2021.
AMD lifted 1% in after-hours trading.
Illustration by TradingView
AMD wins back gamers’ favorAdvanced Micro Devices releases its brand new Radeon RX 6600 – a leaked prototype of which got gamers all worked up in September.
AMD gamers were in a flurry in September after specs for the new Radeon chip were leaked online, causing gamers to accuse the company of favoring crypto miners and their needs over those of the gaming community. AMD denied the rumors at the time, and the new graphics card is not only here, it's optimised for peak gaming performance – easing the fears of the chip-starved gamers.
AMD lifted 3.2% yesterday on the news, closing at its highest price since the beginning of September.
Intel comes after AMDIntel swipes a former AMD chip architect as its new vice president, not long after its CEO Pat Gelsinger claimed that AMD’s dominance would soon be over after the release of its new Alder Lake computer processor.
Intel (INTC) takes another swipe at AMD, taking on one of its former top GPU architects – Vineet Goel – as its new vice president for one of its graphics units. The new hire comes only a week after Intel (INTC) CEO Pat Gelsinger vowed to tackle AMD’s dominance in the market with the company’s new Alder Lake processor, which is apparently much more eco-friendly than AMD’s chips. The CEO wrote:
AMD has done a solid job over the last couple of years. We won't dismiss them of the good work that they've done, but that's over with Alder Lake and Sapphire Rapids.
Only two weeks ago, AMD hired a former Intel (INTC) data centre executive to lead one of its cloud segments, so it’s starting to look like the battle of the Tech Titans.
Could the chip chaos finally be coming to an end?Lisa Su, CEO of AMD, has weighed in on the ongoing semiconductor chip shortage with the optimistic view that the worst of it will be over by the second half of next year. However, she warned that the first half of 2022 could still be a tough one.
Chipmakers like AMD are struggling to catch up with demand from starved gamers and crypto miners, but many have invested in their own chip production plants in the U.S. to combat the shortage, and are hoping the benefits of that will start to show soon. The CEO said:
We’ve always gone through cycles of ups and downs, where demand has exceeded supply, or vice versa. This time, it’s different. It might take, you know, 18 to 24 months to put on a new plant, and in some cases even longer than that. These investments were started perhaps a year ago.
Lisa Su isn't alone in hoping that pressure will be alleviated shortly – Tesla (TSLA) CEO and technoking Elon Musk recently said that he doesn’t see the shortage lasting for the long-term, also citing new plants around the country:
There's a lot of chip fabrication plants that are being built. I think we will have good capacity for providing chips by next year.
Gene Wang / Wikimedia Commons
AMD volunteers as tributeAMD throws its name in the hat and says its ready to produce Arm-based chips.
Shares of AMD lifted over 2% in two hours on Thursday after the chip-making giant said that it is prepared to make chips based on Arm technology, giving the people what they want. Devinder Kumar, AMC’s CFO, said:
We know compute really well. Even ARM, as you referenced, we have a very good relationship with ARM. And we understand that our customers want to work with us with that particular product to deliver the solutions. We stand ready to go ahead and do that even though it's not x86, although we believe x86 is a dominant strength in that area.
Prices closed the day up 0.59%.
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Gamers are sick of sharingAMD gets gamers in a flurry with its new GPU mining chip, which seems to cater specifically to crypto miners.
Graphics card demand is at an all-time high due to the global chip shortage, and after specs for a new AMD mining chip were leaked online, gamers have accused the company of favoring crypto miners and their needs over those of the gaming community.
Devinder Kumar, the company’s CFO, denied the rumors:
That's not a priority for us. We do not prioritize our product or make them for the crypto folks, it is more for the gamers and that's a high priority from that standpoint. What's driven the growth, as you know, we had the Radeon 6000 series high-end GPUs introduced very competitive and that is driving the growth in the GPU space.
Sam Pak / Unsplash
AMD wins big on chip shortageNvidia competitor and champion chip maker Advanced Micro Devices (AMD) has been revelling in the global chip shortage that is making everyone else’s lives miserable, with some mad moves driving an 80% price rise over the past 12 months.
The past few years have been rough for the tech industry, with a serious shortage of semiconductor chips seeing a lot of production lines screech to a halt. But every cloud has a silver lining, and those lucky enough to be in the chip making business have seen record top and bottom line growth. AMD is no exception – its stock doubled in 2020, soaring nearly 50% in July last year. AMD’s main competitors in the CPU market are Intel (INTC) and Nvidia (NVDA), which have also seen meteoric rises on the back of the worsening crisis.
AMD is edging ahead though – the firm made some big moves to gain market share over Intel in the last year, and by Q3 2020 the company held 22.4% of the CPU market: its highest share in 13 years. Business has been boosted by some impressive contracts, including for PlayStation and Xbox consoles and Tesla vehicle gaming rigs – demand for which led to strong Q1 results.
With revenue up 93% in the first quarter and net income more than tripling, it’s been a good year so far.