Advanced Micro Devices (NASDAQ: AMD) finally broke the downward trend after the company reported revenue growth of 40% in the quarter. Its second-quarter outlook is even brighter since it is well-ahead of the consensus forecast.
AMD forecast revenue of $1.675 billion – $1.775 billion, ahead of the consensus estimate of $1.58 billion. The product refresh is clearly driving sales. The first quarter benefited from the Computing and Graphics segment growing an incredible 95% year-on-year to $1.12 billion. Both the graphics (Radeon) and PC chip (Ryzen) business performed admirably. Gross margin improved to 36% while R&D costs totaled just $343 million.
AMD ended the quarter with similar levels of debt but cash and equivalents totaled $1.1 billion.
Bears in Trouble
At a short float of around 19 percent before the earnings report, bears will have a smaller profit from the bearish bet on the stock. If buying pressure lightens up and analysts once again ignorantly forecast weak GPU sales due to the release of crypto mining hardware, then AMD stock could get stuck at the $11-$12 range. For 2018, sales growth that consistently beats managements own expectations will push the stock price to new highs this year. The hard part of this trade is holding and waiting through 2018.
Tech Insider
