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Why Is Advanced Micro (AMD) Up 1.3% Since Last Earnings Report?
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It has been about a month since the last earnings report for Advanced Micro Devices (AMD - Free Report) . Shares have added about 1.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Advanced Micro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AMD Q2 Earnings Beat Estimates, Revenues Up Y/Y
AMD reported second-quarter 2024 non-GAAP earnings of 69 cents per share, beating the Zacks Consensus Estimate by 2.99%. The figure surged 19% year over year.
Revenues of $5.84 billion beat the Zacks Consensus Estimate by 2.2% and increased 9% year over year, as well as 7% sequentially.
The top-line growth benefited from robust Data Center and Client revenues that fully offset sluggishness in the Gaming and Embedded segments.
Top-Line Details
Data Center revenues surged 114.5% year over year to $2.83 billion and accounted for 48.6% of total revenues. Sequentially, revenues increased 21%.
The top line benefited from the solid adoption of AMD Instinct GPUs and strong growth in fourth-gen AMD EPYC CPU sales.
Exiting second-quarter 2024, AMD had more than 900 public cloud instances available, with Netflix and Uber selecting fourth-gen EPYC public cloud instances. In the data center AI business, MI300 quarterly revenues exceeded $1 billion for the first time.
Oracle announced the HeatWave GenAI solution powered by AMD EPYC CPUs, enabling customers to bring the power of generative AI to their enterprise data without requiring AI expertise in the reported quarter.
Microsoft expanded its usage of MI300X accelerators to power GPT-4 Turbo and multiple co-pilot services, including Microsoft 365 Chat, Word, and Teams.
Microsoft also became the first large hyperscaler to announce the general availability of public MI300X instances in the reported quarter.
Enterprise and Cloud AI customer pipeline remains robust. AMD and its partners, including DELL, HPE, Lenovo, and Supermicro, have instinct platforms in production.
The Client segment’s revenues soared 49.5% year over year to $1.49 billion and accounted for 25.6% of total revenues. Sequentially, revenues increased 9%.
The Gaming segment revenues fell 59% year over year to $648 million and accounted for 11.1% of total revenues. Sequentially, revenues declined 30%.
The Embedded segment revenues were $861 million, down 41% year over year but up 2% sequentially. The segment accounted for 14.8% of total revenues.
Operating Details
Non-GAAP gross margin expanded 340 basis points (bps) on a year-over-year basis to 53.1%, primarily due to lower Embedded segment revenues.
Non-GAAP operating expenses increased 15.1% year over year to $1.85 billion.
Non-GAAP operating margin expanded 170 bps on a year-over-year basis to 21.7% in the second quarter.
Balance Sheet & Cash Flow
As of Jun 29, 2024, AMD had cash and cash equivalents (including marketable securities) of $5.34 billion compared with $6.04 billion as of Mar 30, 2024.
As of Jun 29, 2024, total debt was $1.72 billion, unchanged from the figure reported as of Mar 30, 2024.
Operating cash flow was reported at $593 million compared with $521 million in the first quarter of 2024.
Free cash flow was $439 million in the first quarter of 2024 compared with $379 million in the first quarter of 2024.
Guidance
AMD expects third-quarter 2024 revenues to be $6.7 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%.
Sequentially, AMD expects strong growth in the Data Center and the Client segment. Embedded segment revenues are expected to increase while the Gaming segment to decline by a double-digit percentage.
Year over year, AMD expects Data Center and Client segment revenues to be up significantly, driven by the strong product portfolio. The Embedded and the Gaming segment revenues are expected to decline.
For the third quarter, AMD expects non-GAAP gross margin to be roughly 53.5%. Non-GAAP operating expenses are expected to be nearly $1.9 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Advanced Micro has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Advanced Micro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Advanced Micro (AMD) Up 1.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Advanced Micro Devices (AMD - Free Report) . Shares have added about 1.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Advanced Micro due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AMD Q2 Earnings Beat Estimates, Revenues Up Y/Y
AMD reported second-quarter 2024 non-GAAP earnings of 69 cents per share, beating the Zacks Consensus Estimate by 2.99%. The figure surged 19% year over year.
Revenues of $5.84 billion beat the Zacks Consensus Estimate by 2.2% and increased 9% year over year, as well as 7% sequentially.
The top-line growth benefited from robust Data Center and Client revenues that fully offset sluggishness in the Gaming and Embedded segments.
Top-Line Details
Data Center revenues surged 114.5% year over year to $2.83 billion and accounted for 48.6% of total revenues. Sequentially, revenues increased 21%.
The top line benefited from the solid adoption of AMD Instinct GPUs and strong growth in fourth-gen AMD EPYC CPU sales.
Exiting second-quarter 2024, AMD had more than 900 public cloud instances available, with Netflix and Uber selecting fourth-gen EPYC public cloud instances. In the data center AI business, MI300 quarterly revenues exceeded $1 billion for the first time.
Oracle announced the HeatWave GenAI solution powered by AMD EPYC CPUs, enabling customers to bring the power of generative AI to their enterprise data without requiring AI expertise in the reported quarter.
Microsoft expanded its usage of MI300X accelerators to power GPT-4 Turbo and multiple co-pilot services, including Microsoft 365 Chat, Word, and Teams.
Microsoft also became the first large hyperscaler to announce the general availability of public MI300X instances in the reported quarter.
Enterprise and Cloud AI customer pipeline remains robust. AMD and its partners, including DELL, HPE, Lenovo, and Supermicro, have instinct platforms in production.
The Client segment’s revenues soared 49.5% year over year to $1.49 billion and accounted for 25.6% of total revenues. Sequentially, revenues increased 9%.
The Gaming segment revenues fell 59% year over year to $648 million and accounted for 11.1% of total revenues. Sequentially, revenues declined 30%.
The Embedded segment revenues were $861 million, down 41% year over year but up 2% sequentially. The segment accounted for 14.8% of total revenues.
Operating Details
Non-GAAP gross margin expanded 340 basis points (bps) on a year-over-year basis to 53.1%, primarily due to lower Embedded segment revenues.
Non-GAAP operating expenses increased 15.1% year over year to $1.85 billion.
Non-GAAP operating margin expanded 170 bps on a year-over-year basis to 21.7% in the second quarter.
Balance Sheet & Cash Flow
As of Jun 29, 2024, AMD had cash and cash equivalents (including marketable securities) of $5.34 billion compared with $6.04 billion as of Mar 30, 2024.
As of Jun 29, 2024, total debt was $1.72 billion, unchanged from the figure reported as of Mar 30, 2024.
Operating cash flow was reported at $593 million compared with $521 million in the first quarter of 2024.
Free cash flow was $439 million in the first quarter of 2024 compared with $379 million in the first quarter of 2024.
Guidance
AMD expects third-quarter 2024 revenues to be $6.7 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%.
Sequentially, AMD expects strong growth in the Data Center and the Client segment. Embedded segment revenues are expected to increase while the Gaming segment to decline by a double-digit percentage.
Year over year, AMD expects Data Center and Client segment revenues to be up significantly, driven by the strong product portfolio. The Embedded and the Gaming segment revenues are expected to decline.
For the third quarter, AMD expects non-GAAP gross margin to be roughly 53.5%. Non-GAAP operating expenses are expected to be nearly $1.9 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Advanced Micro has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Advanced Micro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.