(Bloomberg) — Advanced Micro Devices Inc. gave a powerful gross sales forecast for the present quarter, indicating that the chipmaker continues to make strides in its most profitable market: data-center processors.
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AMD predicted second-quarter gross sales on Tuesday of roughly $6.5 billion, in contrast with a mean analyst estimate of $6.03 billion. That helped the shares up as a lot as 8.3% in late buying and selling.
The outlook helped allay issues that the chip market is slowing — and signaled that AMD is making additional features on Intel Corp. The firm, which for years lagged far behind Intel in laptop processors, is on tempo to finish 2022 with nearly 4 occasions as a lot income as in 2019. New merchandise and higher execution have helped AMD win over clients who had been as soon as skeptical about its capabilities.
AMD’s outlook contrasts with a current forecast from Intel, which was damage by an accumulation of stock at a few of its PC clients. The return of Covid-related lockdowns in elements of China additionally has squeezed the provision of parts wanted to finish units, Intel stated. Other chipmakers, corresponding to Texas Instruments Inc., have stated these disruptions are hurting progress as effectively.
AMD’s forecast features a increase from its acquisition of Xilinx Inc., a deal it accomplished within the first quarter.
“Each of our businesses grew by a significant double-digit percentage year-over-year,” AMD Chief Executive Officer Lisa Su stated in a press release. Growth of the present enterprise and the Xilinx acquisition have each contributed to stronger full-year expectations, she stated.
Despite AMD’s fast progress, traders have shunned the inventory this yr, a part of a broader pullback for semiconductor shares. Investors have been significantly cautious of chipmakers that made fast features over the previous three years, fearing {that a} collapse is close to. AMD closed at $91.13 in New York Tuesday, down 37% this yr.
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The newest forecast means that AMD nonetheless has momentum. Under Su, the corporate has developed modern parts and outsourced manufacturing — one thing her predecessors struggled to do. That’s led extra chip clients to ditch Intel in favor of AMD.
Intel CEO Pat Gelsinger, who took the helm final yr, is plotting his personal turnaround. He now claims that his firm is providing higher PC processors than AMD and can take again market share.
Unlike Intel, which manufactures its merchandise in-house, AMD works with Taiwan Semiconductor Manufacturing Co., giving it entry to raised expertise. Using the newest manufacturing methods can enhance the way in which chips course of knowledge and the way a lot data they retailer.
While TSMC has surpassed Intel in technological capabilities, it has struggled to fulfill demand for chips. But AMD has an edge over different TSMC clients. Its merchandise are a number of the most costly gadgets popping out of the Taiwanese factories, in concept making it higher positioned to get the provides it wants.
AMD can also be the second-largest maker of graphics chips utilized in add-on playing cards by PC players. It competes in that market with Nvidia Corp. and can face recent opposition from Intel, which has begun providing merchandise for that section for the primary time in years.
AMD, based mostly in Santa Clara, California, provides graphics chips utilized in Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation.
AMD reported first-quarter earnings of $1.13 a share, excluding some gadgets, effectively forward of the 92-cent estimate. Sales rose 71% to $5.9 billion, topping projections of $5.3 billion. The first quarter additionally included contributions from Xilinx.
The chipmaker is predicting annual income of $26.3 billion for 2022, a achieve of 60% from the prior yr. That compares with a mean estimate of $24.1 billion.
AMD is gaining floor on the largest patrons of laptop processors, homeowners of the large knowledge facilities which can be the spine of the web. Some 48% of all new processors put in in these knowledge facilities had been purchased from AMD in March, in response to Jefferies & Co. analyst Mark Lipacis.
(Updates with CEO’s feedback in sixth paragraph.)
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