To The Moon

$Advanced Micro Devices(AMD)$ 

AMD’s 4Q result just gave Intel a sucker punch. Its revenue of $5.6 billion (+16% yoy) surpassed Wall Street's expectations of $5-$5.5 billion in sales. AMD also exceeded consensus estimate with an EPS of 69 cents, compared to the expected 67 cents. What a sharp contrast to the disastrous result from Intel!

Strong revenue growth from DC and Xilinx acquisition, offset by weak PC

Data Center sales rose 42% from the prior-year period, to $1.7B, with sales of EPYC server processors leading those results. Embedded segment revenue was $1.4 billion, primarily driven by the inclusion of Xilinx embedded revenue. However, AMD's client segment, which includes PC sales, saw a decline of 51% from the previous year to $903 million. The gaming segment sales of $1.6 billion were down 7% from the same period in 2022.

CEO Lisa Su bullish in DC for 2023

For the 1Q23 outlook, AMD gave a revenue guidance of $5 billion to $5.6 billion, with declines in client and gaming offset by gains in Data Center and embedded sales, and a gross margin of 50%. CEO Lisa Su said that strategies focused on the Data Center and embedded systems markets would enable the AMD to withstand further decline in the PC sector in the current year. Lisa expressed great confidence in AMD's ability to gain market share in the embedded Data Center market from Intel despite expected elevated levels of inventory in the first half of 2023. She expects significantly stronger growth for Data Center business in 2H over 1H.

Overall, I am very happy with AMD’s result, especially seeing more market share gain from Intel’s CPU business. I guess many investors are also relieved after Intel’s grim outlook. Hopefully there will be a re-rating tonight!

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