AMD Doubled Its Data Center Revenue. Here’s Its 2021 Outlook.


David Paul Morris/Bloomberg

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Semiconductor maker Sophisticated Micro Units stock jumped in right after-several hours buying and selling Tuesday, immediately after the business noted its details heart income doubled. The organization also boosted its comprehensive-12 months forecast amid a global chip shortage.


AMD

(ticker: AMD) shares state-of-the-art 4.2% in the extended session.

In distinction to

Intel

(INTC), which noticed a sharp decline in its knowledge center team when it documented earnings final week, AMD Chief Government
Lisa Su
mentioned that AMD’s knowledge center chip profits additional than doubled in the very first quarter.

AMD claimed initially-quarter internet profits surged 243% to $555 million, which amounts to 45 cents a share, when compared with $162 million, or 14 cents a share a yr in the past. Modified for stock-compensation, and acquisition linked charges, between other issues, earnings amounted to 52 cents a share. Earnings rose to 93% to $3.45 billion.

The consensus adjusted earnings estimate was 44 cents a share, on sales of $3.21 billion.

“We experienced outstanding yr-about-calendar year income advancement throughout all of our businesses and details heart profits additional than doubled,” Su reported. “Our amplified whole-12 months advice highlights the solid progress we expect across our company based on rising adoption of our large-performance computing solutions and increasing buyer interactions.”

The company’s segment that accounts for private personal computer and graphics processor sales—including these destined for servers—grew income 46% to $2.1 billion. AMD suggests its growth was mainly from selling its Ryzen chips and Radeon graphics processors and the common selling price tag of each styles of merchandise greater.

Info middle revenue from AMD are lumped into a reporting section that also consists of chips destined for videogame devices, this kind of as the ones AMD developed for the new consoles built by

Microsoft

(MSFT) and

Sony

(SNE). Blended, the segment noted income rose 286% $1.35 billion, because of new videogame units introduced in November and its most advanced server chips.

“We have established AMD as a reliable, strategic lover to the most significant cloud, business and [high performance computing] clients centered on producing and consistently delivering a leadership, multi-technology CPU highway map,” Su stated.

Despite the yr-over-calendar year growth in the segment, Su explained in geared up remarks for the conference call late Tuesday that its semi-tailor made income declined by a solitary digit sequentially. But, that drop is an advancement over the standard seasonality, where by new console sales drop off just after the holiday break period.

Su explained to Barron’s in an interview Tuesday that the company expects potent product sales via the rest of the calendar year, but it will very likely consider around 3 decades to reach extremely optimized creation for videogame technique chips. Undertaking so makes sense, Su reported, because the console cycle is a great deal extended than other purchaser goods, these kinds of as own pcs.

AMD elevated its total-12 months steering amid a international scarcity of semiconductors that has put immense strain on the chip source chain. AMD reported it now forecasts profits to mature around 50% compared with 2020, which totals about $14.64 billion. Analysts had predicted entire-calendar year adjusted earnings of $1.94 a share and profits of $13.54 billion.

Su advised Barron’s AMD was equipped to improve it because a selection of elements of the company’s small business labored with each other to raise its output: simplifying some of AMD’s possess processes, reducing the logistics involved, and securing extra ability from its supply chain partners.

“It’s all of the above,” Su claimed. “And I would say that we’re not performed at all. There is however a whole lot of operate to do, the inventory concentrations that you normally see in a source chain of this complexity are not there. So it is extremely lean, there is no buffer in the technique.”

The organization forecast 2nd-quarter revenue of $3.6 billion, as well as or minus $100 million. Wall Avenue experienced modeled earnings of $3.29 billion.

Su reported AMD is on keep track of to shut the Xilinx acquisition by the conclude of the yr, which it declared amid a wave of consolidation in the semiconductor industry previous 12 months.

Shares of AMD fell .2% to close at $85.21 during common trading Tuesday. The PHLX Semiconductor index, or Sox, dropped .8% Tuesday.

Compose to Max A. Cherney at max.cherney@barrons.com