AMD Shares Hit Record After Hitting Earnings, Raising Annual Forecast

Shares of Advanced Micro Devices Inc. headed to record highs in after-hours trading on Tuesday after the chip company reported second-quarter earnings that exceeded expectations and raised its full-year forecast despite the COVID-19 pandemic.

reported second-quarter net income of $ 157 million, or 13 cents a share, compared to $ 35 million, or 3 cents a share, in the same period last year. After adjusting for stock-based compensation and other factors, the chip company reported earnings of 18 cents a share, compared to 8 cents a share in the same period last year. Revenue increased to $ 1.93 billion from $ 1.53 billion in the prior year quarter.

Analysts surveyed by FactSet had forecast adjusted earnings of 16 cents a share on revenue of $ 1.85 billion.

AMD announced that it now expects 2020 revenue to grow approximately 32% from 2019, which would equate to annual sales of approximately $ 8.88 billion, compared to the previous guidance of $ 8.08 billion to $ 8.75 billion, according to FactSet. Analysts on average expected 2020 revenue of around $ 8.4 billion, FactSet reported.

“We delivered strong results in the second quarter, led by record sales of notebooks and server processors, as Ryzen and Epyc’s revenues more than doubled from a year ago,” said Lisa Su, AMD President and CEO. “Despite some macroeconomic uncertainty, we are increasing our full-year revenue outlook as we enter our next phase of growth driven by the acceleration of our business in multiple markets.”

Patrick Moorhead, principal analyst at Moor Insights & Strategy, who thought AMD was being conservative earlier this year, believes that sales have even more room to work.

“I think this new forecast is conservative as I believe Epyc’s revenue will be even higher,” said Moorhead.

The shares rose more than 10% after business hours, after a 2% decline in the regular session to close at $ 67.61, and were ahead of AMD’s intraday record of $ 71.63, set at the end of last week. . After leading the S&P 500 SPX index,
In annual percentage gains in both 2018 and 2019, AMD shares have risen more than 47% so far in 2020, as the S&P is down 0.4%.

AMD’s results follow last week’s surprising announcement that Intel Corp. INTC,
delayed the launch of its 7-nanometer chips until at least the end of 2022 due to manufacturing problems. AMD has already released 7nm chips for servers and personal computers, and has found a bigger market share and increased sales and profits with those products.

Read:AMD is resisting the coronavirus while the biggest rival fights

AMD reported sales of $ 1.37 billion for computing and graphics chips, 45% more than $ 940 million last year, in line with analyst expectations for a 45% increase to $ 1.36 billion. Sales of enterprise embedded and semi-custom chips, the unit that includes data center and game console revenues, were $ 565 million, 4% less than the $ 591 million a year earlier, but well ahead of Analysts’ average forecast of an 18% decrease to $ 485.5 million.

For the third quarter, AMD predicted sales of $ 2.45 billion to $ 2.65 billion, while analysts on average had forecast revenue of $ 2.31 billion. The company and analysts expect AMD’s semi-custom, integrated business to accelerate in the second half of the year as Sony Corp. SNE’s new video game consoles,
and Microsoft Corp. MSFT,
that have the implementation of AMD chips.