AMD Stock: 3 Analysts Discuss Results After Big Beat Sent Shares 6% Higher

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AMD Stock: 3 Analysts Discuss Results After Big Beat Sent Shares 6% Higher

Shares of Advanced Micro Devices (NASDAQ: AMD ) are up nearly 6% in premarket trading Wednesday after the company issued better-than-expected Q2 revenue and margins outlook.

For Q1, the chipmaker reported an adjusted EPS of $1.13, up from 52c in the year-ago period and analyst estimates of 92c per share. Revenue came in at $5.89 billion, up 71%, and above the expected $5.3 billion.

Looking ahead to the second quarter, the company expects revenue in the range of $6.3 billion to $6.7 billion, topping the analyst estimates of $6.03 billion. Adjusted gross margin is expected at roughly 54%, while analysts were expecting 52.9%.

For the full year, AMD expects revenue of about $26.3 billion, up from its previous forecast of $21.5 billion and compared to the analyst consensus of $24.08 billion. The chipmaker expects FY adjusted gross margin of around 54%, compared to its previous guidance of 51% and analyst expectations of 53.2%.

“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,” AMD said 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.”

Here’s what Street analysts had to say about AMD’s Q1 performance and guidance.

BMO’s Ambrish Srivastava (Market Perform, $100): “AMD raised its top-line guidance for 2022 to a mid-30% growth vs. the 31% (core) previously. Despite PC weakness, where AMD's assumptions continue to be conservative, and more in line with how we believe the market is shaping out to be, AMD's share gains in servers are helping. Assumptions for Xilinx are for 2x growth vs. what we had been modeling for. Consequently, the acquisition should be slightly accretive this year. We are raising our estimates, but remain Market Perform rated on shares.”

Raymond (NS: RYMD ) James’ Chris Caso (Strong Buy, $160): “The report was consistent with our view outlined in our upgrade to Strong Buy last week, and our favorable initiation a year ago, and while they guided to upside for the full year, only low-single digit sequential growth is required in 2H to achieve the full year number, suggesting conservatism. Our revised 2023 EPS of $4.94 implies an 18x multiple, which no longer implies a multiple premium, which we think is highly attractive given AMD’s secular growth profile.”

UBS’ Timothy Arcuri (Neutral, $110 from $150): “We remain on the sidelines for two reasons: First, while the XLNX and Pensando acquisitions set AMD on a path to mirror NVDA/INTC's multipronged approach to the data center, we still view data center GPU/accelerator efforts as being hampered by software (revenue declined Q/Q) and we don’t see XLNX as a near-term remedy. Second, we see Server CPU share gain as the biggest driver of the stock - AMD gained ~120 bps server CPU share in Q1 and we see a path to AMD exiting C2022 >15% share - but we believe AMD's competitive landscape is getting more difficult.”

By Senad Karaahmetovic

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