AMD expects gaming, data center to remain strong in 2021 as quarterly revenue tops $3 billion for first time

After adjusting for the release of a $1.3 billion tax valuation allowance because of strong results and other factors, the chip company reported earnings of 52 cents a share, compared with 32 cents a share in the year-ago period. Revenue rose to $3.24 billion from $2.13 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 47 cents a share on revenue of $3.03 billion.

AMD reported fourth-quarter sales of $1.96 billion for computing and graphics chips, up 18% from $1.66 billion last year, compared with analyst expectations of $1.8 billion. Sales from enterprise embedded and semi-custom chips — the unit that includes data-center and gaming-console revenue — were $1.28 billion, up 176% from $465 million a year ago, compared with analysts’ average forecast of $1.24 billion.

AMD President and CEO Lisa Su said on the conference call that gaming products got a big boost from last quarter’s release of Microsoft Corp.’s MSFT, +1.22% new line of Xbox consoles and Sony Corp.’s SNE, +0.43% PlayStation 5.

“Our semi-custom [system on a chip] sales are ramping faster than the last console cycle, and we expect sales to be better than typical seasonality in the first half of this year, based on the current strong demand,” Su said on the call.

On the server side, Su said cloud and enterprise sales remained strong.

“Google GOOG, +0.94% GOOGL, +0.72%, Microsoft, Tencent 700, -6.26% and others continue expanding their use of Epyc processors to power larger portions of their critical internal infrastructure and the number of AMD powered cloud instances expands,” Su said.

The company expects first-quarter revenue between $3.1 billion and $3.3 billion, and 2021 revenue to rise about 37%, or to about $13.37 billion.

Analysts expect first-quarter revenue of $2.72 billion, and 2021 revenue of $12.26 billion.

Su also said AMD has “passed several important regulatory milestones to date” regarding its acquisition of Xilinx Inc. XLNX, -0.52% and that the deal remains on track to close by the end of 2021.

AMD shares, which had been up as much as 3% after hours, were last down less than 1% in extended trading, following a 0.6% rise in the regular session to close at $94.71.

Over the past 12 months, AMD shares have gained 88%. In comparison, the PHLX Semiconductor Index  SOX, -1.54% rose 58% over that time, the S&P 500 index SPX, -0.15% gained 17%, and the tech-heavy Nasdaq Composite Index COMP, -0.07% rose 46%.