AMD Hits Q2 Street Expectations, But Stock Drops On Lower Guidance

Advanced Micro Devices, Inc. AMD shares were down in after-hours trading on lower-than expected sales guidance after the chipmaker reported earnings and revenue in line with Wall Street expectations.  

The company reported second-quarter earnings of 8 cents per share, hitting the Street target. Revenue came in at $1.53 billion, also meeting estimates.

The disappointment came in the third-quarter outlook. AMD said it sees sales of $1.75 billion to $1.85 billion, lower than the $1.95 billion estimate.

Earnings were down from 14 cents in the same period last year, while revenue was down 12.87% from the same quarter last year, but up 20% quarter over quarter.

"I am pleased with our financial performance and execution in the quarter as we ramped production of three leadership 7nm product families," said Dr. Lisa Su, AMD president and CEO. "We have reached a significant inflection point for the company as our new Ryzen, Radeon and EPYC processors form the most competitive product portfolio in our history and are well positioned to drive significant growth in the second half of the year."

The earnings print followed a report earlier Tuesday that AMD may be on the verge of a big client win, with an analyst raising the possibility the company could win Alphabet Inc. GOOGL subsidiary Google’s data center business, taking it away from Intel Corporation INTC. AMD has already been gaining market share from Intel for several quarters.

Highlights

• Gross margin was 41%, flat quarter-over-quarter but up 4 percentage points year-over-year, primarily driven by increased Ryzen and EPYC processor sales.
• Operating income was $59 million compared to $153 million a year ago and $38 million in the prior quarter.
• Net income was $35 million compared to $116 million a year ago and $16 million in the prior quarter. Non-GAAP net income was $92 million compared to $156 million a year ago and $62 million in the prior quarter.

Shares of AMD were down 7% in after-hours trading to $31.51.

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