Advanced Micro Devices (NASDAQ:AMD) is a disappointing stock in the year-to-date period but a sold company. The stock traded in the $80 - $90 range for months. The earnings report may change that.
In the first quarter, AMD posted Q1 revenue growing an astonishing 92.7% Y/Y to $3.45 billion. Looking ahead to Q2, it expects revenue of $3.6 billion, above the $3.26 billion consensus estimate. The non-GAAP gross margin will be 47%.
For the year, AMD sees revenue growing by over 50%. It had previously guided on 37% growth. Though AMD stock is priced for perfection at a price-to-earnings in the 40 times range, growth investors should watch for an entry point.
AMD will likely exceed estimates in the coming quarters. Its Ryzen 5000 series is a better choice for Intel (NASDAQ:INTC) chips. Limited supply is the only constraint in AMD’s revenue growth. In the server space, Intel’s revenue drop is due to AMD’s EPYC now on the third generation. The chip has better performance and total cost of ownership advantages.
In the graphics space, the surging crypto prices and strong gaming demand is a positive catalyst for AMD Radeon. With RDNA 2 architecture, the GPU is competitive to Nvidia’s (NASDAQ:NVDA) product. And while Nvidia still has a wide lead to AMD’s GPU, its supplies are low. That will lift AMD’s GPU sales.
