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Advanced Micro Devices (AMD) to Post Q4 Earnings: What to Expect?

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Advanced Micro Devices (AMD - Free Report) is set to release fourth-quarter 2021 results on Feb 1.

The company expects fourth-quarter 2021 revenues to be $4.5 billion (+/-$100 million), which indicates year-over-year growth of 39% and quarter-over-quarter improvement of 4%.

The year-over-year growth is expected to be driven by robust sales across all its businesses. The sequential increase is projected to be led by growth across higher server and semi-custom verticals.

The Zacks Consensus Estimate for revenues is pegged at $4.52 billion, suggesting growth of 39.4% from the year-ago quarter’s reported figure.
 

 

The consensus estimate for fourth-quarter earnings is pegged at 75 cents per share, unchanged over the past 30 days. The figure indicates an improvement of 44.2% on a year-over-year basis.

Factors Likely to Have Influenced Q4 Earnings

AMD’s fourth-quarter results are expected to have benefited from strong demand for EPYC processors, thanks to adoption by the likes of Amazon (AMZN - Free Report) , Microsoft (MSFT - Free Report) and International Business Machines (IBM - Free Report) .

During the to-be-reported quarter, Amazon’s cloud offering, Amazon Web Services, expanded its EPYC processor-based offerings with the general availability of general-purpose Amazon EC2 M6a instances.

AMD’s EPYC processors have been used in developing several high-performance computing systems. These include Microsoft Azure supercomputers for United Kingdom’s Met Office, The Perlmutter supercomputer and The Singapore National Supercomputing Centre supercomputer.

The U.S. Department of Energy’s Argonne National Laboratory has chosen AMD’s EPYC processors to power a new supercomputer called Polaris, which will prepare researchers for the forthcoming exascale supercomputer at Argonne called Aurora.

Moreover, IBM Cloud selected third-generation EPYC processors to expand its bare-metal service offerings. The new servers, featuring 128 cores, up to 4TB of memory and 10 NVMe drives per server, give users full access to high-end, dual-socket performance.

AMD is riding on higher sales of its Ryzen and Radeon processors, owing to increasing proliferation of AI and Machine Learning in industries like cloud gaming and the supercomputing domain.

The chipmaker is also likely to gain from steady momentum witnessed in the adoption of Ryzen, Radeon and semi-custom processors. These processors are being heavily utilized in the cloud, gaming, PC and data center verticals, driven by work-from-home and online-schooling trends due to the pandemic.

The growing clout of 7 nanometer (nm) products in the data center vertical, driven by the work-from-home and online-learning trends, is a key catalyst for this Zacks Rank #2 (Buy) company. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, component shortages and supply chain constraints have hurt PC shipments in the fourth quarter of 2021. AMD’s top-line growth is expected to have suffered from this trend in the going-to-be-reported quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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