AMD gains 6% on softer revenue landing, citing AI progress
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Advanced Micro Devices (NASDAQ:AMD) stock surged after hours Tuesday, up 5.8% after second-quarter earnings where it beat expectations on top and bottom lines, thanks to some ramp-up in its new-gen Epyc and Ryzen 7000 processors.
Revenues fell 18% to $5.36B, but were expected to do worse, and gross profit slipped 19% to $2.44B, though gross margin remained flat at 46%.
Revenues were light of expectations in the company's data centers and in-line in gaming, but its Client business surpassed expectations with a lower-than-expected drop.
âWe delivered strong results in the second quarter as 4th Gen Epyc and Ryzen 7000 processors ramped significantly,â said Chair/CEO Dr. Lisa Su. âOur AI engagements increased by more than seven times in the quarter as multiple customers initiated or expanded programs supporting future deployments of Instinct accelerators at scale."
With the drop in revenues, operating income swung to a loss of $20M from a year-ago gain of $526M, and net income fell on a GAAP basis to $27M from a year-ago $447M.
In non-GAAP measures, gross margin was 50% (down 4 points year-over-year), operating income fell 46% to $1.068B (margin of 20%, down 10 points) and net income fell 44% to $948M from $1.71B.
Revenue by segment: Data Center, $1.3B (down 11%); Client, $998M (down 54%); Gaming, $1.6B (down 4%); Embedded, $1.5B (up 16%).
For Q3, the company's guiding to revenue of $5.4B-$6.0B (vs. consensus for $5.85B), with gross margin of about 51%, five points better than that in Q2.
âLooking to the third quarter, we expect our Data Center and Client segment revenues to each grow by a double-digit percentage sequentially driven by increasing demand for our Epyc and Ryzen processors, partially offset by Gaming and Embedded segment declines," said Chief Financial Officer Jean Hu.
Conference call to come at 5 p.m. ET.

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