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Why Is Advanced Micro (AMD) Down 13.5% Since Last Earnings Report?
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It has been about a month since the last earnings report for Advanced Micro Devices (AMD - Free Report) . Shares have lost about 13.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Advanced Micro due for a breakout? 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 catalysts.
Advanced Micro Devices reported second-quarter 2022 non-GAAP earnings of $1.05 per share, which surpassed the Zacks Consensus Estimate by 1.94% and our estimate of $1.03.
Revenues of $6.55 billion outpaced the Zacks Consensus Estimate by 0.41% and were better than our estimate of $6.52 billion.
The bottom line soared 67% year over year on top-line growth of 70%.
The robust performance benefited from higher data center and embedded revenues as AMD continues to expand its presence across a broader set of markets and customers.
Top-Line Details
AMD announced new reporting segments - Data Center, Client, Gaming and Embedded - beginning second-quarter 2022.
Data Center comprises server CPUs, data center GPUs, Pensando and Xilinx data center products. Revenues jumped 82.8% year over year to $1.49 billion and accounted for 22.7% of total revenues. The segment benefited from strong sales of EPYC server processors.
EPYC’s adoption rate continued to increase in the reported quarter. Leading cloud providers —Microsoft, Oracle and Alphabet— expanded their AMD-powered offerings in the reported quarter.
Alphabet’s Google Cloud N2D and C2D virtual machines are enabling enhanced security offerings with third-generation EPYC processors.
Microsoft cloud platform Azure is set to deploy AMD Instinct MI200 accelerators for large-scale AI training.
Moreover, Oracle Cloud VMware solution product offering, new Oracle Cloud Infrastructure E4 Dense instances are using EPYC processors to deliver ideal performance for hybrid cloud environments.
The client segment includes desktop and notebook PC processors and chipsets. Revenues surged 24.5% year over year to $2.15 billion and accounted for 32.9% of total revenues. The segment’s revenues were driven by strong sales of Ryzen mobile processors. Client processor ASP increased year-over-year driven by a richer mix of Ryzen mobile processor sales.
The gaming segment includes discrete graphics processors and semi-custom game console products. Revenues soared 31.9% year over year to $1.66 billion and accounted for 25.3% of total revenues. The top-line benefited from higher semi-custom product sales, partially offset by a decline in gaming graphics revenues.
The embedded segment includes AMD and Xilinx embedded products. Revenues were $1.26 billion compared with the year-ago quarter’s figure of $54 million. The segment accounted for 19.2% of total revenues.
Operating Details
Non-GAAP gross margin expanded 640 basis points (bps) on a year-over-year basis to 54%. The gross margin expansion was primarily driven by higher Data Center and Embedded segment revenues.
Non-GAAP operating expenses increased 71.8% year over year to $1.56 billion.
Non-GAAP operating margin of 30.3% was significantly better than the year-ago quarter’s 24%.
Balance Sheet & Cash Flow
As of Jun 25, 2022, AMD had cash and cash equivalents (including marketable securities) of $5.99 billion compared with $6.53 billion as of Mar 26, 2022.
As of Jun 25, 2022, total debt (long-term plus short-term) was $2.78 billion compared with $1.79 billion as of Mar 26, 2022.
Operating cash flow was reported at $1.04 billion compared with $995 million in first-quarter 2022.
Free cash flow was $906 million in the second quarter compared with $924 million in first-quarter 2022.
Guidance
AMD expects third-quarter 2022 revenues to be $6.7 billion (+/-$200 million), which indicates year-over-year growth of 55%.
Non-GAAP gross margin is anticipated to be 54%.
For 2022, AMD expects revenues to increase 60% year over year to $26.3 billion (+/-$300 million).
AMD expects the non-GAAP gross margin for 2022 to be 54%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -6.92% due to these changes.
VGM Scores
Currently, Advanced Micro has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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Why Is Advanced Micro (AMD) Down 13.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Advanced Micro Devices (AMD - Free Report) . Shares have lost about 13.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Advanced Micro due for a breakout? 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 catalysts.
AMD Beats on Q2 Earnings & Revenues, Provides Solid '22 View
Advanced Micro Devices reported second-quarter 2022 non-GAAP earnings of $1.05 per share, which surpassed the Zacks Consensus Estimate by 1.94% and our estimate of $1.03.
Revenues of $6.55 billion outpaced the Zacks Consensus Estimate by 0.41% and were better than our estimate of $6.52 billion.
The bottom line soared 67% year over year on top-line growth of 70%.
The robust performance benefited from higher data center and embedded revenues as AMD continues to expand its presence across a broader set of markets and customers.
Top-Line Details
AMD announced new reporting segments - Data Center, Client, Gaming and Embedded - beginning second-quarter 2022.
Data Center comprises server CPUs, data center GPUs, Pensando and Xilinx data center products. Revenues jumped 82.8% year over year to $1.49 billion and accounted for 22.7% of total revenues. The segment benefited from strong sales of EPYC server processors.
EPYC’s adoption rate continued to increase in the reported quarter. Leading cloud providers —Microsoft, Oracle and Alphabet— expanded their AMD-powered offerings in the reported quarter.
Alphabet’s Google Cloud N2D and C2D virtual machines are enabling enhanced security offerings with third-generation EPYC processors.
Microsoft cloud platform Azure is set to deploy AMD Instinct MI200 accelerators for large-scale AI training.
Moreover, Oracle Cloud VMware solution product offering, new Oracle Cloud Infrastructure E4 Dense instances are using EPYC processors to deliver ideal performance for hybrid cloud environments.
The client segment includes desktop and notebook PC processors and chipsets. Revenues surged 24.5% year over year to $2.15 billion and accounted for 32.9% of total revenues. The segment’s revenues were driven by strong sales of Ryzen mobile processors. Client processor ASP increased year-over-year driven by a richer mix of Ryzen mobile processor sales.
The gaming segment includes discrete graphics processors and semi-custom game console products. Revenues soared 31.9% year over year to $1.66 billion and accounted for 25.3% of total revenues. The top-line benefited from higher semi-custom product sales, partially offset by a decline in gaming graphics revenues.
The embedded segment includes AMD and Xilinx embedded products. Revenues were $1.26 billion compared with the year-ago quarter’s figure of $54 million. The segment accounted for 19.2% of total revenues.
Operating Details
Non-GAAP gross margin expanded 640 basis points (bps) on a year-over-year basis to 54%. The gross margin expansion was primarily driven by higher Data Center and Embedded segment revenues.
Non-GAAP operating expenses increased 71.8% year over year to $1.56 billion.
Non-GAAP operating margin of 30.3% was significantly better than the year-ago quarter’s 24%.
Balance Sheet & Cash Flow
As of Jun 25, 2022, AMD had cash and cash equivalents (including marketable securities) of $5.99 billion compared with $6.53 billion as of Mar 26, 2022.
As of Jun 25, 2022, total debt (long-term plus short-term) was $2.78 billion compared with $1.79 billion as of Mar 26, 2022.
Operating cash flow was reported at $1.04 billion compared with $995 million in first-quarter 2022.
Free cash flow was $906 million in the second quarter compared with $924 million in first-quarter 2022.
Guidance
AMD expects third-quarter 2022 revenues to be $6.7 billion (+/-$200 million), which indicates year-over-year growth of 55%.
Non-GAAP gross margin is anticipated to be 54%.
For 2022, AMD expects revenues to increase 60% year over year to $26.3 billion (+/-$300 million).
AMD expects the non-GAAP gross margin for 2022 to be 54%.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -6.92% due to these changes.
VGM Scores
Currently, Advanced Micro has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Advanced Micro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.