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AMD Gears Up for Q2 Earnings: Semi-Custom & EPYC in Focus

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Advanced Micro Devices’ (AMD - Free Report) second-quarter 2021 results, to-be-reported on Jul 27, are expected to have benefited from the ongoing momentum in EPYC processors and semi-custom products’ sales.

However, higher investments on product development and platform to retain its competitive stance against the likes of Intel (INTC - Free Report) and NVIDIA (NVDA - Free Report) are likely to have affected profitability.

Click here to know how the company’s overall second-quarter performance is expected to be.

Strong Demand for EPYC Processors: Key Catalyst

AMD have been clinching new deal wins for its EPYC processors from data centers, cloud and high-performance computing (“HPC”) companies, including Amazon Web Services (AWS), Alphabet’s (GOOGL - Free Report) Google Cloud and Microsoft’s Azure.

The company’s increased server share is expected to have driven top-line growth in the to-be-reported quarter. AMD is riding on strong demand for both second- and third-generation EPYC processors.


Growing adoption of second-generation solutions was complemented by third-generation EPYC processors amid new deal wins from major enterprise, cloud and HPC companies.

Semi-custom revenues in the second quarter are anticipated to benefit from strong demand for Xbox Series X, Xbox Series S and PlayStation 5 gaming consoles.

In first-quarter 2021, Enterprise, Embedded and Semi-Custom segment’s (39% of total revenues) revenues of $1.345 billion were up 286% year over year and 5% sequentially.

The Zacks Consensus Estimate for Enterprise, Embedded and Semi-Custom segment for the second quarter is pegged at $1.44 billion.  The projection suggests an increase of 154.3% from the figure reported in the year-ago quarter.

Computing and Graphics to Aid Top Line

AMD is expected to have witnessed steady demand for Ryzen processors in the second quarter due to the extension of the work-from-home and online-learning set up.

The consensus mark for revenues for this Zacks Rank #2 (Buy) company’s Computing and Graphics segment for the second quarter is pegged at $2.17 billion, which indicates an increase of 58.7% on a year-over-year basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Higher PC shipments in the second quarter, driven by increased demand, are anticipated to have favored the segment’s performance.

Strong PC shipments’ trend in the second quarter of 2021, driven by increased demand for notebooks, is expected to have favored AMD’s performance in the to-be-reported quarter. Per IDC data, PC shipments in second-quarter 2021 improved 13.2% year over year to 83.6 million units. This is expected to have driven the second-quarter 2021 top line.