In the reporting quarter, the chip manufacturer AMD increased its revenue by 100% y/y, to a record $3.85 billion and continued to take market share from Intel. It would seem that quite recently the company could not make a profit in any way, but already now the final EPS values exceed analysts ' forecasts by $0.09. The gross margin increased by 4 points, to 48%, while management expects to get a similar result in the next quarter. This should happen due to the dynamics of the data center segment, which has a high profitability-about 55%. At the moment, the revenue for this segment is 20% of the total figures.
AMD is extremely positive: revenue of $4.1 billion is expected in the next quarter (Wall Street expected a figure of $3.8 billion). If earlier the annual revenue growth was predicted by about 50%, now it is already by 60%, to $15.6 billion.
With the growth of revenue, the operating margin also increases. Management has revised the forecast for the indicator for the better against the background of a decrease in the share of operating expenses in revenue to 25%, and now expects a figure of 23%.
Market participants are looking forward to the future with hope and expect that AMD will still be able to achieve the expected values for EPS: $2.69 in 2022 and $3.35 in 2023. To increase the annual revenue in the direction of data centers by $2.7 billion, the company only needed to increase the market share to 24%. An increase of this figure to 50% contributes to the appearance of an additional $5.4 billion. AMD can quite easily increase revenue to $20 billion only due to growing sales in this segment. Let's not forget that other divisions (CPU and GPU) are also actively developing.
The main risk is a retaliatory strike from Intel, which will slow down AMD's expansion in the market. However, at the moment, no serious change in the status quo in the chip market is expected.