An AMD Ryzen processor on a PC motherboard.
Ultraone/Dreamstime
Advanced Micro Devices reported fourth-quarter earnings above the Street’s expectations late Tuesday. The chip maker also said it’s expecting 2021 to be a good year for the company, and is projecting full-year growth well above what investors previously expected.
Executives said that the company expects voracious demand for chips destined for personal computers, data centers, and videogame consoles to continue, though there is no single segment of AMD’s business that will dominate its continued success.
Shares of AMD (ticker: AMD) are falling 1.9%, to $92.90, in the extended session. Shares closed up 0.6%, to $94.71, during regular trading Tuesday.
The company reported net income of $1.78 billion, or $1.45 a share, but the boost includes a tax benefit of $1.3 billion, compared with a profit of $170 million, or 15 cents a share, a year ago. Without the tax benefit and other considerations, AMD reported fourth-quarter per-share earnings of 52 cents, compared with adjusted earnings of 32 cents a share in the year-ago period. Sales rose 16% to $3.24 billion.
Analysts had expected adjusted earnings of 47 cents a share on sales of $3.02 billion.
Amid a boom in demand for semiconductors around the world that has exceeded the industry’s ability to sell them, AMD said that it is expecting continued growth in the first quarter across all its business units. The company said it expects revenue of roughly $3.2 billion in the quarter and full-year sales growth of 37% over 2020. Analysts had predicted growth of about 20% for 2021.
“Our 2021 financial outlook highlights the strength of our product portfolio and robust demand for high-performance computing across the PC, gaming and data center markets,” CEO Lisa Su said.
For the fourth quarter, AMD said its personal-computer and graphics chip sales amounted to $1.96 billion, primarily because of its processors, which topped the consensus estimates. The company said its segment that includes data centers and videogame console chip sales grew 176%, to $1.28 billion. Analysts had expected sales of $1.21 billion.
Investors had been expecting a substantial increase from the launch of new game systems from Microsoft (MSFT) and Sony (SNE). The next-generation consoles are virtually impossible to buy, a situation that is likely to continue well into 2023. Typically, AMD’s margins improve as its manufacturing partner Taiwan Semiconductor Manufacturing (TSM) slowly improves the yield.
AMD stock has advanced 88% in the past year, while the PHLX Semiconductor Index has gained 58%.
Write to Max A. Cherney at [email protected]
