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Advanced Micro (AMD) Up 1.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Advanced Micro Devices (AMD - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Advanced Micro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Advanced Micro Devices reported first-quarter 2022 non-GAAP earnings of $1.13 per share, which surpassed the Zacks Consensus Estimate by 24.18%. The bottom line soared 117% year over year and 23% sequentially.
Revenues of $5.89 billion outpaced the Zacks Consensus Estimate by 17.73% and surged 71% year over year. On a quarter-over-quarter basis, the top line increased 22%.
Robust performance by the Computing and Graphics, and Enterprise Embedded and Semi-Custom segments drove year-over-year improvement.
Top-Line Details
Computing and Graphics segment revenues of $2.8 billion increased 33% year over year and 8% sequentially. The upside can be attributed to higher Ryzen and Radeon processor sales.
Growth in client processor average selling price (“ASP”) was driven by a favorable mix of Ryzen processor sales. GPU ASP reported year-over-year growth in the reported quarter, driven by high-end Radeon graphics product sales.
Enterprise, Embedded and Semi-Custom segment revenues of $2.5 billion were up 88% year over year and 13% sequentially. The year-over-year increase can be attributed to higher semi-custom and embedded product sales, and EPYC processor revenues.
EPYC’s adoption rate continued to increase in the reported quarter. Leading cloud providers —Microsoft, Amazon and Alphabet — expanded their AMD-powered offerings with more than 465 new public instances being launched in the reported quarter.
Microsoft cloud platform, Azure, upgraded its HBv3 virtual machines (VMs) to third-generation AMD EPYC processors with AMD 3D V-Cache technology.
Alphabet’s Google Cloud C2D VMs are now powered by EPYC processors. AMD EPYC is also supporting the new Amazon EC2 Hpc6a instances for HPC workloads and Amazon EC2 6ainstances for compute-intensive workloads.
On a pro-forma basis, Xilinx generated revenues of more than $1 billion, up 22% year over year.
Operating Details
Non-GAAP gross margin expanded 660 basis points (bps) on a year-over-year basis and 240 bps sequentially, to 53%. The gross margin expansion was primarily driven by higher server processor revenues and high-margin Xilinx revenues.
Non-GAAP operating expenses increased 62% year over year and 22% quarter over quarter to $1.35 billion.
Non-GAAP operating margin of 31% was significantly better than the year-ago quarter’s 22% and the previous quarter’s 27%.
Segment-wise, Computing and Graphics operating income was $723 million compared with $485 million reported in the year-ago quarter and $566 million in the previous quarter.
Enterprise, Embedded and Semi-Custom operating income was $881 million, significantly higher than the year-ago quarter’s figure of $277 million and prior-year quarter’s figure of $762 million.
Balance Sheet & Cash Flow
As of Mar 26, 2022, AMD had cash and cash equivalents (including marketable securities) of $6.53 billion compared with $3.61 billion as of Dec 25, 2021.
As of Mar 26, 2022, total debt (long-term plus short-term) was $1.79 billion compared with $313 million as of Dec 25, 2021.
Operating cash flow was reported at $995 million compared with $822 million in fourth-quarter 2021.
Free cash flow was $924 million in the first quarter compared with $736 million in fourth-quarter 2021.
Guidance
AMD expects second-quarter 2022 revenues to be $6.5 billion (+/-$200 million), which indicates year-over-year growth of 69% and quarter-over-quarter improvement of 10%.
Non-GAAP gross margin is anticipated to be 54%.
For 2022, AMD expects revenues to increase 60% year over year to $26.3 billion.
AMD expects non-GAAP gross margin for 2022 to be 54%, up from the previous guidance of 51%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 5.56% due to these changes.
VGM Scores
At this time, Advanced Micro has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Advanced Micro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Advanced Micro (AMD) Up 1.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Advanced Micro Devices (AMD - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Advanced Micro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AMD Beats on Q1 Earnings & Revenues, Provides Solid '22 View
Advanced Micro Devices reported first-quarter 2022 non-GAAP earnings of $1.13 per share, which surpassed the Zacks Consensus Estimate by 24.18%. The bottom line soared 117% year over year and 23% sequentially.
Revenues of $5.89 billion outpaced the Zacks Consensus Estimate by 17.73% and surged 71% year over year. On a quarter-over-quarter basis, the top line increased 22%.
Robust performance by the Computing and Graphics, and Enterprise Embedded and Semi-Custom segments drove year-over-year improvement.
Top-Line Details
Computing and Graphics segment revenues of $2.8 billion increased 33% year over year and 8% sequentially. The upside can be attributed to higher Ryzen and Radeon processor sales.
Growth in client processor average selling price (“ASP”) was driven by a favorable mix of Ryzen processor sales. GPU ASP reported year-over-year growth in the reported quarter, driven by high-end Radeon graphics product sales.
Enterprise, Embedded and Semi-Custom segment revenues of $2.5 billion were up 88% year over year and 13% sequentially. The year-over-year increase can be attributed to higher semi-custom and embedded product sales, and EPYC processor revenues.
EPYC’s adoption rate continued to increase in the reported quarter. Leading cloud providers —Microsoft, Amazon and Alphabet — expanded their AMD-powered offerings with more than 465 new public instances being launched in the reported quarter.
Microsoft cloud platform, Azure, upgraded its HBv3 virtual machines (VMs) to third-generation AMD EPYC processors with AMD 3D V-Cache technology.
Alphabet’s Google Cloud C2D VMs are now powered by EPYC processors. AMD EPYC is also supporting the new Amazon EC2 Hpc6a instances for HPC workloads and Amazon EC2 6ainstances for compute-intensive workloads.
On a pro-forma basis, Xilinx generated revenues of more than $1 billion, up 22% year over year.
Operating Details
Non-GAAP gross margin expanded 660 basis points (bps) on a year-over-year basis and 240 bps sequentially, to 53%. The gross margin expansion was primarily driven by higher server processor revenues and high-margin Xilinx revenues.
Non-GAAP operating expenses increased 62% year over year and 22% quarter over quarter to $1.35 billion.
Non-GAAP operating margin of 31% was significantly better than the year-ago quarter’s 22% and the previous quarter’s 27%.
Segment-wise, Computing and Graphics operating income was $723 million compared with $485 million reported in the year-ago quarter and $566 million in the previous quarter.
Enterprise, Embedded and Semi-Custom operating income was $881 million, significantly higher than the year-ago quarter’s figure of $277 million and prior-year quarter’s figure of $762 million.
Balance Sheet & Cash Flow
As of Mar 26, 2022, AMD had cash and cash equivalents (including marketable securities) of $6.53 billion compared with $3.61 billion as of Dec 25, 2021.
As of Mar 26, 2022, total debt (long-term plus short-term) was $1.79 billion compared with $313 million as of Dec 25, 2021.
Operating cash flow was reported at $995 million compared with $822 million in fourth-quarter 2021.
Free cash flow was $924 million in the first quarter compared with $736 million in fourth-quarter 2021.
Guidance
AMD expects second-quarter 2022 revenues to be $6.5 billion (+/-$200 million), which indicates year-over-year growth of 69% and quarter-over-quarter improvement of 10%.
Non-GAAP gross margin is anticipated to be 54%.
For 2022, AMD expects revenues to increase 60% year over year to $26.3 billion.
AMD expects non-GAAP gross margin for 2022 to be 54%, up from the previous guidance of 51%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 5.56% due to these changes.
VGM Scores
At this time, Advanced Micro has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Advanced Micro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.