AMD Sees Its Stock Soar After Reporting Better-than-expected Earnings And Strong 2022 Sales Outlook

Advanced Micro Devices (AMD) reported its fourth-quarter earnings on Tuesday and its results surpassed the expectations of analysts. The company also delivered a strong sales forecast for the year 2022. After the announcement, the company saw its stock soar more than 11 percent in extended trading.

AMD reported earnings per share of $0.92, adjusted, surpassing $0.76 that analysts estimated, according to Refinitiv. Revenue on the other hand was up 49 percent YoY at $4.83 billion and beat the estimate of $4.53 billion that analysts expected, according to Refinitiv.

In 2022, AMD expects $21.5 billion in sales, a 31 percent increase from 2021 sales. Its expectation is more than that of analysts that stands at $19.26 billion.

In 2021, the company sales grew by 68 percent while gross margin increased to 48 percent. Its impressive results can be attributed to an increase in PC and electronics sales and partly to its newly-released chips that are helping the company challenge other rivals.

AMD reported growth of 32 percent in its computing and graphics category and recorded $2.6 billion in revenue. The company mentioned that the sales were driven by Ryzen processors and Radeon graphics processor sales, noting that the average selling price for both product lines was increasing on an annual basis.

Apart from PCs, the company also sells chips for cloud servers and game consoles which fall under its Embedded, Enterprise and Semi-custom category. This category grew by 75 percent to $2.2 billion thanks to an increase in the sales of server chips and game consoles. According to the company’s CEO Lisa Su, “We expect [semi-custom] revenue to grow this year driven by continued strong demand for the latest Microsoft and Sony consoles” because the current console upgrade cycle is outpacing “all prior generations”.

Last year, the company announced plans to acquire Xiinx for $35 billion. The acquisition will help place the company in a better position to compete with its rivals. Although the deal has not been closed, the company said that it has received regulatory approval from Chinese regulatory bodies. “The only remaining regulatory review required is FTC approval of our HSR re-filing and we expect to close the transaction in the first quarter of 2022”, the company’s CEO said.

In 2021, the company repurchased $1.8 billion of its shares. AMD said it spent $1 billion in 2021 to secure long-term production capacity. The CEO mentioned last September that she expects the chip shortage to become less severe this year.

The company’s stock was down 22 percent year-to-date as of Tuesday’s market close.