AMD stock rises as data-center, gaming segment sales nearly triple

Advanced Micro Devices Inc. shares rose in the extended session Tuesday after the chip maker said sales from its data-center and gaming segment nearly tripled and hiked its outlook again for the year.

shares rose 2% in after-hours trading, following a 0.9% decline in the regular session to close at $91.03.

AMD reported second-quarter net income of $710 million, or 58 cents a share, compared with $157 million, or 13 cents a share, in the year-ago period. After adjusting for stock-based compensation and other factors, the Santa Clara, Calif.-based company reported earnings of 63 cents a share, compared with 18 cents a share in the year-ago period. Revenue rose to $3.85 billion from $1.93 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 54 cents a share on revenue of $3.62 billion, as AMD projected between $3.5 billion to $3.7 billion.

Sales from enterprise embedded and semi-custom chips — the unit that includes data-center and gaming-console revenue — nearly tripled to $1.6 billion, compared with $565 million a year ago. Analysts surveyed by FactSet expected $1.44 billion. Traditionally, AMD has not broken out data-center sales from gaming sales.

Read: The chip crunch marches on, but one sector could be in store for relief

“Our business performed exceptionally well in the second quarter as revenue and operating margin doubled and profitability more than tripled year-over-year,” said AMD Chief Executive Lisa Su in a statement. “We are growing significantly faster than the market with strong demand across all of our businesses.”

Last week, Intel Corp.
reported a better-than-feared 9% decline in data-center sales, but its forecast amid a global chip shortage did little to bolster the stock.

Read: Intel changed the name of its chips, but analysts say the story hasn’t changed

AMD reported second-quarter sales of $2.25 billion for computing and graphics chips, up from $1.37 billion last year, compared with analyst expectations of $2.17 billion.

AMD expects third-quarter revenue of $4 billion to $4.2 billion, while analysts had been projecting $3.82 billion, according to FactSet.

See also: Intel appears to be feeling the competitive heat from AMD

Executives hiked AMD’s guidance for the full year yet again, to grow about 60% year over year compared with a forecast of 50% growth in the previous guidance. AMD reported revenue of $9.67 billion last year, so that suggests sales of about $15.47 billion this year, while analysts forecast revenue of $14.65 billion, according to FactSet.

More of how the chip sector is dealing with supply shortages will be revealed this week, with Qualcomm Inc.
and Lam Research Corp.
earnings on Wednesday and KLA Corp.
earnings on Thursday.

Over the past 12 months, AMD shares have gained 32%. In comparison, the PHLX Semiconductor Index
has gained 52%, the S&P 500 index
has risen 36%, and the tech-heavy Nasdaq Composite Index
is up 39%.

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