AMD Stock Rallies On Q4 Beat, Positive Outlook: Data Center, Gaming Revenues Shine

Advanced Micro Devices, Inc. AMD announced fourth-quarter results Tuesday that exceeded expectations on all metrics, with strong data center revenues and server and gaming processor sales being the highlights.

The company issued upbeat forecasts for the March quarter as well as the fiscal-year 2022 amid the ramp of existing products and launch of next-gen product planned for the year.

AMD's Key Q4 Numbers: Santa Clara, California-based AMD reported fourth-quarter non-GAAP earnings per share of 92 cents per share, up 77% year-over-year from the 52 cents reported a year ago. The bottom-line result was 26% higher than the 73 cents per share made in the previous quarter.

Revenues climbed 49% year-over-year and 12% quarter-over-quarter to $4.826 billion, beating the guidance for $4.5 billion, plus or minus $100 million.

The results also exceeded the consensus estimates that called for EPS of 76 cents per share and revenues of $4.52 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 president and CEO Dr. Lisa Su.

The gross margin came in at 50%, up five percentage points from the fourth quarter of 2020 and about two percentage points higher than the previous quarter. The company attributed the margin expansion to a richer product mix.

Cash, cash equivalents and short-term investments at the end of the fourth quarter stood at $3.6 billion.

AMD bought back $756 million worth of shares during the quarter.

The company also reported record annual revenues and profit for the full-year 2021.

Rival Intel Corporation INTC reported last week better-than-expected quarterly results on strong cloud demand and a rebound in client but issued weak earnings guidance for the March quarter.

Related Link: Ahead Of Tech Earnings, Analyst Names Nvidia And These 4 Semiconductor Stocks As 2022 Top Picks

AMD's Segmental Performance:  AMD's Computing and Graphics segment recorded revenues of $2.6 billion, representing 32% year-over-year growth and 8% sequential growth. The segment accounted for about 54% of the total revenues and contributed $566 million in operating profit.

AMD attributed the solid performance to strong Ryzen and Radeon processor sales.

This segment includes desktop and notebook processors, chipsets and GPUs as well as data center and professional products and development services.

The Enterprise, Embedded and Semi-Custom segment revenue climbed 75% year-over-year and 17% sequentially to $2.2 billion, helped by higher EPYC and semi-custom processor sales. Operating income from the segment came in at $762 million.

This segment comprises server and embedded processors, system-on-chip products and services and technology for gaming products.

Ahead of the results, Rosenblatt Securities analyst Hans Mosesmann said he expects data center and gaming revenues to see marked strength.

AMD's Forward Guidance: AMD guided first-quarter revenues to $5 billion, plus or minus $100 million, while analysts, on average, estimate revenues of $4.32 billion.

The company expects non-GAAP gross margin at 50.5%.

For the full-year, the chipmaker expects revenue of $21.5 billion, ahead of the $19.27-billion consensus estimate. The company guided the full-year non-GAAP gross margin to 51%.

"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," Su in a statement.

AMD Stock: AMD stock, which ended Tuesday's regular session up 2.21% at $116.78, was seen rallying 9.92% to $128.36 in the after-hours session.

The stock has shed about 20% in the year-to-date tech sell-off, after ending 2021 with a gain of about 57%.

Mosesmann has a Buy rating and $180 price target on AMD shares.

Related Link: AMD Previews 30 New Products At CES 2022: What You Need To Know