AMD stock has been under pressure this year, largely because of a weakening demand for PCs.
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Advanced Micro Devices’ high-end server-chip business is thriving and taking share from Intel. That’s the key takeaway from AMD ’s latest quarterly results released on Tuesday. The chip maker’s stock jumped on the news in late trading.
Chip maker AMD said revenue from its EPYC server processor business more than doubled during the March quarter. In comparison, last week Intel (ticker: INTC
) reported 22% year-over-year growth for its data-center server unit for the same period.
AMD (AMD) also reported adjusted earnings per share of $1.13, compared to Wall Street’s consensus estimate of 91 cents, according to FactSet. Revenue came in at $5.9 billion, which was above analysts’ expectations of $5.01 billion. The numbers include results from AMD’s acquisition of Xilinx, which closed on Feb. 14. It is unclear whether analyst estimates have been properly adjusted for the deal. AMD said revenue for the quarter excluding Xilinx came in at $5.3 billion.
AMD shares rose as much as 6% following the release.
On the conference call, the company’s management admitted the overall PC market is “experiencing some softness.” But AMD said it was less affected because the company has been focusing more on the stronger commercial and higher-end portion of the PC business. Further, management said their business outlook for their server chips and gaming console chip units has strengthened for the rest of the year.
Analysts have been getting more cautious on AMD shares because of a weakening PC market. In April, the research firm IDC said worldwide shipments for personal computers fell 5% year over year during the March quarter as a result of diminishing demand from consumers and supply-chain challenges.
Last month, Wedbush analyst Matt Bryson reiterated an Outperform rating and $165 price target on the company. “Like a large portion of our tech universe, AMD has been under pressure since the turn of the year with softening PC sales,” he wrote. “Our conversations suggest AMD is still working to meet customer demand for EPYC [server] parts.”
Write to Tae Kim at [email protected]
