AMD surges almost 12%; results show 'zero red flags'
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Advanced Micro Devices (NASDAQ:AMD)
shares surged almost 12% in pre-market trading, Wednesday, in the wake of the semiconductor giant posting fourth-quarter results that handily beat Wall Street's expectations.
For the quarter ended in December, AMD (AMD) said it earned $0.80 a share, on $4.8 billion in revenue, which topped analysts' estimates for a profit of $0.76 a share on sales of $4.52 billion.
Wedbush Securities analyst Matt Bryson said AMD's results, and management commentary, show a company that provided "zero red flags" for investors and is staving off its top rival.
Bryson said it has become "clichÃ©" to talk about how AMD (AMD) beat and raised estimates, but the company did so again, as it benefited from most of its segments, including CPUs, GPUs and servers. Bryson added that AMD's (AMD) management doesn't see a recovering Intel "as impacting AMDâs ability to continue to take share through the entirety of this year."
Bryson has an outperform rating and $165 price target on AMD's (AMD) stock.
AMD (AMD) also said its gross margins, a closely watched measure for semiconductor companies, reached 50% in the quarter, up 5% year-over-year and 2% sequentially, driven by a "richer product mix."
For its first quarter, AMD (AMD) said it expects revenue to be between $4.9 billion and $5.1 billion, up roughly 45% year-over-year and 4% sequentially, with non-GAAP gross margins of 50.5%. For all of 2022, AMD expects sales to be $21.5 billion, a jump of 31% over 2021, with non-GAAP gross margins of approximately 51%.
Wall Street analysts had expected the company to generate $19.26 billion in sales in 2022.
In addition, Bryson noted full-year guidance of 21% revenue growth "handily topped prior Street estimates" and the expectations for 51% gross margins leave room for upside in the first quarter as a better mix of growth outside of game consoles should benefit the company throughout the year.
Bryson added that AMD's (AMD) results also suggest positive business trends for Nvidia (NASDAQ:NVDA), Taiwan Semiconductor (NYSE:TSM) and Micron (NASDAQ:MU), but could imply the company is taking some market share from Intel (NASDAQ:INTC).
Late last month, China approved AMD's (AMD) $35 billion purchase of Xilinx (NASDAQ:XLNX), noting it did not need CFIUS approval.