What to look for from AMD

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  • Analysts estimate adjusted earnings per share at $0.91 versus $0.56 in the second quarter of fiscal year 2021.
  • Revenue is expected to grow, but at a slower rate than the previous quarter.
  • Analysts expect revenue to rise at a healthy pace, but at a slower pace.

Advanced Micro Devices, Inc. (AMD) has reported significant profit and revenue growth in the past two fiscal years amid increased demand for semiconductors during the COVID-19 pandemic. The company took steps to build on that momentum this spring with the acquisition of Pensando Systems Inc. Valued at $1.9 billion, which adds packet processing chips to AMD’s expanded portfolio of offerings.

Investors will be watching closely whether AMD can maintain its rapid growth amid a slowing global economy when the company announces its after-market earnings on August 2, 2022 for the second quarter of fiscal year 2022. Analysts expect AMD’s adjusted earnings per share (EPS) and revenue will grow significantly year-over-year (YOY) in the second quarter, albeit at a slower pace than the prior year quarter.

Investors will also focus on AMD’s returns in its institutional, consolidated and semi-dedicated segment, which is one of the company’s two main business segments. The sector – which includes server and embedded processors rather than desktop and laptop processors – is growing rapidly. For the second quarter, analysts estimate strong year-over-year growth, although that growth will be the slowest in nine quarters.

AMD shares fell off the broader market last year. The stocks initially fell in the fall of 2021, then almost outperformed between November and January 2022. Since then the stock has moved sharply overall, marked by short advances and then sharper declines. The stock advanced in the last week of July. Over the past year, AMD reported a total return of -10.8% compared to a total return of the S&P 500 of -5.8% as of August 1, 2022.


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AMD earnings history

AMD’s adjusted EPS growth has been strong in recent years, after it reported year-over-year increases for 11 consecutive quarters through the first quarter of fiscal year 2022. Adjusted EPS growth accelerated during the pandemic. In fiscal 2020, adjusted earnings per share grew 113.1% year over year. While EPS continues to see growth, the rate has slowed. In the second quarter of fiscal year 2021, adjusted earnings per share grew 349.5% year over year. Now, for the second quarter of this year, analysts estimate 61.2% year-over-year growth.

AMD’s revenue growth was also strong. The company posted 11 consecutive quarters of increases, culminating in a 99.3% increase in the second quarter of fiscal 2021. But that pace has been slower in recent quarters, with the company reporting growth of 48.8% in the fourth quarter of fiscal 2021 and 70.9% in First quarter of fiscal year 2022. For the second quarter, analysts expect revenue to rise 69.5%, a significant slowdown from the same period a year earlier.

AMD key stats
Estimated for the second quarter of fiscal year 2022 Second quarter of 2021 The second quarter of the year 2020
Adjusted earnings per share (in dollars) $0.91 $0.56 $0.13
Revenue (billion dollars) $6.5 $3.9 $1.9
Enterprise, embedded and semi-earmarked earnings (in billions of dollars) $2.7 1.6 dollars $0.6

Source: Visible Alpha

basic scale

As mentioned earlier, investors will also focus on a key metric: the amount of revenue generated by AMD’s Enterprise, Embedded, and Semi-Custom. This segment includes servers, embedded processors, semi-dedicated System-on-Chip (SoC) products, development services, and game console technology. It does not include AMD desktop and mobile microprocessors, which are included in the company’s computing and graphics segment. The enterprise, embedded and semi-custom segment is growing at a rapid clip. The company has traditionally made GPUs for gaming and graphic design computers like its bread and butter. As demand for chips expands to other areas such as machine learning or cryptocurrency mining, AMD saw an opportunity. These unconventional demand areas continue to be a significant growth area for AMD, creating a more dynamic part of the business.

In the second quarter of fiscal year 2022, revenue in AMD’s embedded and semi-dedicated corporate segment is expected to grow 67.8% year-over-year to $2.7 billion. That’s a slower pace compared to the second quarter of fiscal 2021 when the company reported 183.2% year-over-year growth to $1.6 billion. Analysts expect a sharper year-on-year slowdown, from a 113.2% increase in revenue in fiscal 2021 to half that pace, with a 55.6% rise in fiscal 2022.

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