What to Look For From AMD
Key points to remember
- Analysts estimate adjusted EPS at $0.91 versus $0.56 in Q2 2021.
- Revenue is expected to grow, but at a slower pace than the prior year quarter.
- Analysts expect revenue to grow at a healthy, but slower pace.
Advanced Micro Devices, Inc. (AMD) has seen dramatic growth in earnings and revenue over the past two fiscal years amid soaring demand for semiconductors throughout the COVID-19 pandemic . The company took steps to build on that momentum this spring with the acquisition of Pensando Systems Inc. for $1.9 billion, which adds packet data processing chips to AMD’s expanded lineup of offerings. .
Investors will be watching closely whether AMD can maintain its rapid growth amid a slowing global economy when the company reports aftermarket results on August 2, 2022 for the second quarter of fiscal 2022. Analysts expect AMD’s earnings per share (EPS) and adjusted revenue to grow significantly year-over-year (YOY) in Q2, albeit at a slower pace than in Q3 last year.
Investors will also focus on AMD’s revenue in its Enterprise, Embedded and Semi-Custom segment, one of the company’s two main business segments. The segment, which includes servers and embedded processors rather than desktop and laptop processors, has grown rapidly. For the second quarter, analysts estimate strong year-on-year growth, although this growth would be the slowest in nine quarters.
AMD shares have lagged the broader market over the past year. Stocks first trailed in the fall of 2021, then outperformed roughly between November and January 2022. Since then, the stock has generally been on a steep decline, marked by short advances and then steeper declines. The stock rose in the last week of July. Over the past year, AMD has posted a total return of -10.8% compared to the S&P 500 total return of -5.8% as of August 1, 2022.
TradingView.
AMD revenue history
AMD’s Adjusted EPS growth has been strong in recent years, recording year-over-year increases for 11 consecutive quarters through the first quarter of fiscal 2022. Adjusted EPS growth has even accelerated during the pandemic . In fiscal 2020, Adjusted EPS increased 113.1% year-on-year. As EPS continues to grow, the rate has slowed. In the second quarter of fiscal 2021, Adjusted EPS increased 349.5% year-on-year. Now, for the second quarter of this year, analysts estimate growth of 61.2% year-on-year.
AMD’s revenue growth was also robust. The company recorded 11 consecutive quarters of increases, peaking at 99.3% in the second quarter of fiscal 2021. But that pace has been slower in recent quarters, with the company posting 48.8% growth in fourth quarter of fiscal 2021 and 70.9% in the first quarter of fiscal 2022. For the second quarter, analysts expect revenue to grow 69.5%, a significant deceleration from the same period a year earlier.
| AMD Key Statistics | |||
|---|---|---|---|
| Estimate for the second quarter of fiscal 2022 | Q2 2021 | Q2 2020 | |
| Adjusted earnings per share ($) | $0.91 | $0.56 | $0.13 |
| Revenue ($B) | $6.5 | $3.9 | $1.9 |
| Enterprise, Embedded, and Semi-Custom Revenue ($ Billions) | $2.7 | $1.6 | $0.6 |
Source: visible alpha
The key metric
As mentioned above, investors will also focus on one key metric: the amount of revenue generated by AMD’s Enterprise, Embedded, and Semi-Custom segment. The segment encompasses embedded servers and processors, semi-custom System-on-Chip (SoC) products, development services and game console technology. It does not include AMD’s desktop and notebook computer microprocessors, which are included in the company’s computer and graphics segment. The Enterprise, Embedded and Semi-Custom segment is growing at a rapid pace. The company has traditionally made GPUs for gaming PCs and graphic design like bread and butter. As demand for chips expanded into other areas such as machine learning or cryptocurrency mining, AMD saw an opportunity. These non-traditional demand areas continue to be an important area of growth for AMD, creating a more dynamic part of the business.
In the second quarter of fiscal 2022, revenue from AMD’s Enterprise, Embedded and Semi-Custom segment is expected to grow 67.8% year-on-year to $2.7 billion. That’s a slower pace compared to the second quarter of fiscal 2021, when the company posted 183.2% year-over-year growth to $1.6 billion. Analysts expect an even steeper slowdown on a year-over-year basis, from revenue growing 113.2% in fiscal 2021 to half that pace, rising 55.6% in of the 2022 financial year.