AMD Q4 2021 Earnings Report Recap

^{Source: Predictions based on analysts' consensus from Visible Alpha}

Advanced Micro Devices (AMD) Financial Results: Analysis

Advanced Micro Devices, Inc. (AMD) reported Q4 FY 2021 earnings that beat consensus estimates. Adjusted earnings per share (EPS) smashed expectations, rising 76.9% compared to the year-ago quarter. Revenue also exceeded expectations, up 48.8% year over year (YOY). AMD's Enterprise, Embedded and Semi-Custom segment posted revenue that came in above forecasts. The company's shares rose nearly 10% in extended trading. Over the past year, AMD's shares have provided a total return of 33.1%, above the S&P 500's total return of 20.5%.

AMD Enterprise, Embedded and Semi-Custom Revenue

AMD's Enterprise, Embedded and Semi-Custom segment revenue rose 74.6% YOY, accelerating from the previous quarter's pace and ending a deceleration trend that had begun in the second quarter. The segment encompasses server and embedded processors, semi-custom System-on-Chip (SoC) products, development services, and game console technology. It does not include AMD's desktop and notebook microprocessors, which are included in the company's Computing and Graphics segment.

The Enterprise, Embedded and Semi-Custom segment is the smaller of the company's two main segments, generating a little over one-third of companywide revenue in FY 2020. However, it has been growing much faster than the Computing and Graphics segment as processing chips are being embedded in more and more products. Revenue for the Computing and Graphics segment rose 31.8% YOY to $2.6 billion in the fourth quarter.

Demand for the types of chips AMD's Enterprise, Embedded and Semi-Custom segment offers have risen sharply, especially since the start of the pandemic. Data centers saw increased online traffic from people working and studying from home, causing a need for greater server capacity. People also increased their consumption of video games as a form of entertainment during the pandemic. Supply has not been able to increase as fast as demand, triggering a global semiconductor shortage.

AMD Xilinx Acquisition Update

AMD reiterated that it has received approval from China's State Administration for Market Regulation for its planned acquisition of semiconductor company Xilinx, Inc. (XLNX). AMD first announced plans to acquire Xilinx in October 2020 through a transaction valued at $35 billion. AMD expects the deal to close sometime during the current quarter. The company is still waiting for clearance from the U.S. government. The acquisition would help AMD better compete with Intel Corporation (INTC) in the market for data center chips.

AMD Outlook

AMD said that it expects revenue in Q1 FY 2022 to be approximately $5.0 billion, which would reflect revenue growth of about 45% YOY. For full-year FY 2022, AMD expects revenue of approximately $21.5 billion, which would reflect an increase of about 31% compared to FY 2021. Growth for both the quarter and the full year is expected to be driven by growth across all of the company's businesses.

AMD Earnings Call Recap

In an analyst call after earnings were released, Chief Executive Officer (CEO) Lisa Su said that semi-custom revenue would be a key driver of AMD's growth in 2022. “We expect [semi-custom] revenue to grow this year driven by continued strong demand for the latest Microsoft and Sony consoles,” she said, adding that the current console upgrade cycle is outpacing “all prior generations.”

AMD's next earnings report (for Q1 FY 2022) is expected to be released on April 25, 2022.