AMD Q2 May Show Share Gains At Intel's Expense: Q2 Earnings Preview

Chipmaker Advanced Micro Devices Inc’s AMD second-quarter earnings are on tap on Tuesday after the market close.

Q2 Expectations: Santa Clara, California-based AMD is widely expected to report second-quarter non-GAAP earnings per share of $1.03, higher than the year-ago EPS of $0.63 per share. In the prior quarter, the bottom line was at $1.13 per share.

Analysts, on average, estimate revenue to jump about 70% year-over-year from $3.85 billion to $6.53 billion. This matches the 71% year-over-year revenue growth pace seen for the first quarter of 2022, when topline was at $5.89 billion.

AMD had guided to second-quarter revenue of $6.5 billion, plus or minus $200 million.

Rosenblatt Securities analyst Hans Mosesmann is modeling above-consensus top- and bottom-line results for AMD, driven by strong CPU and GPU share gains in both consumer and data center segments, as well as strength in Xilinx FFGA trends.

This will be AMD’s first full quarter reflecting the contribution from its acquisition of programmable graphics chipmaker Xilinx, which was completed in mid-February.

The company’s gross margin contracted to 48% in the March quarter due to the amortization of intangible assets and acquisition-related costs. Excluding Xilinx, the non-GAAP gross margin expanded by one percentage point to 51%.

Rival Intel Corporation INTC last week reported sub-par second quarter results, with Mosesmann blaming the shortfall on “the rapid decline in economic activity, OEM inventory adjustments, and an overall lack of execution in product design and DCAI.”

Related Link: AMD, Alibaba, Starbucks Earnings On Deck As Q2 Reporting Season Passes Half-Way Mark

Forward Outlook: The consensus estimates for the third quarter call for non-GAAP EPS of $1.09 and revenue of $6.82 billion.

Rosenblatt sees upside to estimates in the third quarter, thanks to market share gains.

AMD had in April raised its full-year revenue guidance to $26.3 billion. Analysts, on average, model non-GAAP EPS and revenue of $4.38 and $26.18 billion, respectively.

Earnings Call Focal Points: Rosenblatt’s Mosesmann said he's looking ahead to AMD’s commentary on:

• next-generation CPU - Zen 4-based Ryzen 7000 and EPYC 4
• next-generation RDNA/CDNA GPU roadmaps
• early synergies that Xilinx FPGAs bring to broader end markets such as communications, data center, automotive, and industrial.
• AMD’s supply situation

AMD’s Stock Take: AMD shares have pulled back along with the tech stocks and are down about 32.7% year-to-date. This compares to the 12.9% drop for the SPDR S&P 500 ETF Trust SPY and a 20.5% pullback by the Invesco QQQ Trust QQQ.

The average analysts’ price target for AMD stock is $127.13, according to data compiled by TipRanks. This would mean the stock has room to run up by about 31%.

In premarket trading Tuesday, AMD stock was seen slipping 0.62% to $96.18, according to Benzinga Pro data.