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Earnings Results: AMD stock rallies 10% after earnings, revenue, outlook blow past Street views


Advanced Micro Devices Inc. shares soared in the extended session Tuesday after the chip maker’s results and outlook for the quarter and year blew past Wall Street estimates and the company reached a milestone profit margin of 50%.

AMD AMD, +2.21% shares soared 10% after hours, following a 2.2% gain in the regular session to close at $116.78.

AMD reported fourth-quarter net income of $974 million, or 80 cents a share, compared with $1.78 billion, or $1.45 a share, in the year-ago period. After adjusting for stock-based compensation and other factors, the Santa Clara, Calif.-based company reported earnings of 92 cents a share, compared with 52 cents a share in the year-ago period.

Revenue rose to $4.83 billion from $3.24 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast adjusted earnings of 70 cents a share on revenue of $4.52 billion, after AMD projected between $4.4 billion to $4.6 billion.

“Each of our businesses performed extremely well, with data-center revenue doubling year-over-year driven by growing adoption of AMD EPYC processors across cloud and enterprise customers,” said AMD Chief Executive Lisa Su in a statement. “We expect another year of significant growth in 2022 as we ramp our current portfolio and launch our next generation of PC, gaming and data-center products.”

Gross margins came in at 50% for the fourth quarter, up from 45% in the year-ago quarter, and 48% for the third quarter. The 50% margin milestone is significant for AMD as larger rival Intel Corp. INTC, +0.27% has been dealing with shrinking margins, which executives have assured would stay “comfortably above 50%,” or in the 52% to 53% range for the year.

Sales from enterprise, embedded and semi-custom chips — the unit that includes data-center and gaming-console revenue — rose to $2.24 billion, compared with $1.28 billion a year ago. Analysts had forecast $2.1 billion.

In AMD’s computing and graphics segment, the company reported second-quarter sales of $2.58 billion, up from $1.96 billion last year, compared with analyst expectations of $2.42 billion.

AMD said it expects first-quarter revenue between $4.9 billion and $5.1 billion, while analysts had forecast $4.35 billion.

For 2022, AMD forecast gross margins of 51% for the year and said it expects revenue of about $21.5 billion, a 31% gain from 2021’s $16.43 billion. Analysts had forecast $16.13 billion for 2021 and $19.29 billion for 2022.

Last quarter, AMD had raised its full-year sales guidance — as it has in every quarterly earnings report so far this year — for growth of about 65% year-over-year.

Recently, AMD received conditional regulatory approval from Chinese regulators for its $35 billion deal to acquire Xilinx Inc. XLNX, +2.46%. AMD disclosed late last year it expected the deal to close this quarter.

At the close of regular trading, AMD shares remained firmly in bear-market territory, 29% off their closing high of $161.91 set on Nov. 29, but have still gained 32% over the past 12 months. In comparison, the PHLX Semiconductor Index SOX, +0.79% is up 16% over that time, the S&P 500 index SPX, +0.69% has gained 20%, and the tech-heavy Nasdaq Composite Index COMP, +0.75% has gained 6.5%.

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