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 internet 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 may generate 50% or extra higher efficiency per clock cycle than the earlier technology. 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 towards Intel.

The outcomes have been higher than what rival Intel reported. Up to now couple of years, Intel has additionally found each the chip design aspect and in manufacturing, the place it has misplaced its technological benefit to rivals corresponding to TSMC, which makes each processors and graphics chips for AMD. Because of this, 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 availability 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 document income based mostly on our robust execution and expanded product portfolio,” stated AMD CEO Lisa Su, in an announcement. “Every of our segments grew considerably year-over-year, led by larger gross sales of our knowledge middle and embedded merchandise. We see continued progress within the again half of the yr highlighted by our subsequent technology 5nm product shipments and supported by our diversified enterprise mannequin.”

Intel, in the meantime, has been doubling down on its manufacturing investments as a solution 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 anticipate 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 larger income and offset partially by larger working bills.

In an analyst name, Su stated that Epyc processor demand was robust within the quarter with progress 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 section income was $2.2 billion, up 25% from a yr in the past, pushed by Ryzen cell processor gross sales. Consumer processor common promoting costs elevated due to Ryzen cell. 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 cell.

Gaming section income was $1.7 billion, pushed by larger semi-custom product gross sales corresponding 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 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 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 checklist of the world’s quickest supercomputers.

Embedded section income was $1.3 billion, up 2,228% from a yr in the past due to 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 attributable to amortization of intangible property associated to the Xilinx acquisition. The corporate stated that it noticed robust progress 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 due to progress within the datacenter and embedded segments.

For the total yr, AMD estimates income might 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 could be very robust.

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

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