CEO: AMD Doubled Revenue from Epyc Data Center Chip Sales in Q2

Ian King (Bloomberg) -- Advanced Micro Devices Inc. gave a strong second-quarter sales forecast indicating the chipmaker is taking market share from Intel Corp. amid robust demand for personal computers and servers.

Second-quarter revenue will be about $3.6 billion, plus or minus $100 million, in the period ending in June, Santa Clara, California-based AMD said Tuesday in a statement. That compares with an average analyst estimate of $3.28 billion.

Investors have poured money into the stock, betting that new products, including its Epyc server chips, and stumbles by Intel present an opportunity for AMD. Intel reported data center revenue that dropped 20% in the first quarter, leading many analysts to project that it was losing sales to its smaller rival in the most profitable part of the market for computer processors. AMD said its server business surged in the quarter.

“We delivered another quarter of record server-processor revenue, as Epyc processor sales more than doubled year-over-year and grew by a strong double-digit percentage sequentially,” AMD Chief Executive Officer Lisa Su told analysts on a conference call. “We expect data center product revenue to grow significantly as we go through the year, driven by our strong pipeline of new cloud, enterprise and HPC (high-performance computing) wins.”

Three months ago she forecast that the company’s revenue would grow 37% this year. On Tuesday, AMD lifted that prediction to a 50% gain in 2021. Prior to the call, Wall St. had been projecting an annual gain of 39%.

The bullish outlook has prompted questions about whether AMD can get enough chips to meet demand amid industry-wide shortages at the company’s outsourced manufacturer, Taiwan Semiconductor Manufacturing Co. Su said the company has ‘good visibility’ to additional supply coming in the second half that supports the company’s improved forecast for the balance of the year.

AMD competes with Intel in processors for personal computers and servers and has struggled to get more than 20% market share for much of the 50 years they’ve been competing. It also supplies graphics chips used in Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation and competes with Nvidia Corp. in PC GPUs.

Last week, Intel’s report caused a slump in its shares. Executives pinned the large decline in Intel’s data center business on a slowdown in orders by companies such as Alphabet Inc.’s Google and Amazon.com Inc.’s AWS that are working through stockpiles of chips before ordering more, they said.

AMD reported first-quarter net income of $555 million, or 45 cents a share, compared with $162 million, or 14 cents, in the same period a year earlier. Revenue rose 93% to $3.45 billion. Profit, excluding certain items, was 52 cents. Analysts were looking for profit of 44 cents on sales of $3.21 billion.

AMD shares rose about 4% in extended trading after closing at $85.21. The stock has slipped 7% this year, paring a surge over the last five years. It ended 2015 at $2.87.