Insights

Why AMD Stock Surged This Week

What happened
Shares of Advanced Micro Devices (NASDAQ: AMD) jumped 11% this past week, as investors applauded the chipmaker’s strong sales and profit growth metrics.
So what
AMD’s revenue soared 71% year over year to $5.9 billion in its fiscal first quarter, which ended on March 26. The semiconductor leader’s results were boosted by its acquisition of Xilinx, a leading producer of programmable logic devices, in February.
Xilinx’s field-programmable gate arrays can be configured by customers after they’re manufactured. They’re increasingly being used to improve the computing power and power efficiency of data centers. 
Image source: Getty Images.

Yet AMD’s results were impressive even after adjusting for the acquisition. Excluding Xilinx, AMD’s revenue increased 55%, to $5.3 billion.
Better still, AMD is becoming more profitable as it scales its operations. Its adjusted gross margin improved by 7 percentage points to 53%. This margin expansion, combined with the company’s revenue gains, helped to drive AMD’s adjusted earnings higher by 117%, to $1.13 per share.
Now what
AMD sees more good times ahead. Management expects the company’s full-year revenue to grow by 60% to roughly $26.3 billion in 2022, driven in part by additional gains in the data center arena. AMD also projects that its profitability will further improve, with its adjusted gross margin rising to approximately 54%.
Analysts expect AMD to continue to wrestle away market share from industry giant Intel in the coming year. Intel has struggled with production delays that have made it difficult for it to match the performance gains of AMD’s most advanced chips.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy. –

What happened

Shares of Advanced Micro Devices (NASDAQ: AMD) jumped 11% this past week, as investors applauded the chipmaker’s strong sales and profit growth metrics.

So what

AMD’s revenue soared 71% year over year to $5.9 billion in its fiscal first quarter, which ended on March 26. The semiconductor leader’s results were boosted by its acquisition of Xilinx, a leading producer of programmable logic devices, in February.

Xilinx’s field-programmable gate arrays can be configured by customers after they’re manufactured. They’re increasingly being used to improve the computing power and power efficiency of data centers. 

Image source: Getty Images.

Yet AMD’s results were impressive even after adjusting for the acquisition. Excluding Xilinx, AMD’s revenue increased 55%, to $5.3 billion.

Better still, AMD is becoming more profitable as it scales its operations. Its adjusted gross margin improved by 7 percentage points to 53%. This margin expansion, combined with the company’s revenue gains, helped to drive AMD’s adjusted earnings higher by 117%, to $1.13 per share.

Now what

AMD sees more good times ahead. Management expects the company’s full-year revenue to grow by 60% to roughly $26.3 billion in 2022, driven in part by additional gains in the data center arena. AMD also projects that its profitability will further improve, with its adjusted gross margin rising to approximately 54%.

Analysts expect AMD to continue to wrestle away market share from industry giant Intel in the coming year. Intel has struggled with production delays that have made it difficult for it to match the performance gains of AMD’s most advanced chips.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Intel. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.

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