By Wallace Witkowski
Advanced Micro Devices Inc. expects strong data-center and gaming sales to keep sales strong into 2021 after the chip maker topped $3 billion in quarterly revenue for the first time late Tuesday and its results and outlook both topped Wall Street estimates.
AMD /zigman2/quotes/208144392/composite AMD +2.05% reported fourth-quarter net income of $1.78 billion, or $1.45 a share, compared with $170 million, or 15 cents a share, in the year-ago period.
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 /zigman2/quotes/207732364/composite MSFT +2.11% new line of Xbox consoles and Sony Corp.’s 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 /zigman2/quotes/205453964/composite GOOG +2.40% /zigman2/quotes/202490156/composite GOOGL +2.21% , Microsoft, Tencent /zigman2/quotes/204605823/delayed HK:700 +0.52% 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. /zigman2/quotes/209389378/composite XLNX +2.96% and that the deal remains on track to close by the end of 2021.
AMD shares were off 2.8% in premarket trading.
Over the past 12 months, AMD shares have gained 88%. In comparison, the PHLX Semiconductor Index /zigman2/quotes/210598361/realtime SOX +3.02% rose 58% over that time, the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.49% gained 17%, and the tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +2.32% rose 46%.