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AMD's Q3 Earnings: Semi-Custom & EPYC Demand to Aid Growth

Advanced Micro Devices' AMD third-quarter 2021 results, to-be-reported on Oct 26, are expected to have benefited from the ongoing momentum in EPYC processors and semi-custom products’ sales.

However, higher investments by AMD on product development and platform to retain its competitive stance against the likes of Intel INTC and NVIDIA NVDA are likely to have affected profitability.

Click here to know how the company’s overall Q3 performance is expected to be.

Strong Demand for EPYC Processors: Key Catalyst

AMD has been clinching new deal wins for its EPYC processors from data centers, cloud and high-performance computing companies, including Hewlett-Packard Enterprise, Amazon Web Services (AWS), Alphabet’s GOOGL Google Cloud and Microsoft’s Azure.

AMD’s increased server share is expected to have driven top-line growth in the to-be-reported quarter. AMD is riding on strong demand for both second- and third-generation EPYC processors.

Advanced Micro Devices, Inc. Revenue (Quarterly YoY Growth)

Advanced Micro Devices, Inc. revenue-quarterly-yoy-growth | Advanced Micro Devices, Inc. Quote


Semi-custom revenues in the third quarter are anticipated to benefit from strong demand for Xbox Series X, Xbox Series S and PlayStation 5 gaming consoles.

In second-quarter 2021, Enterprise, Embedded and Semi-Custom revenues of $1.60 billion were up 183% year over year and 19% sequentially.

The Zacks Consensus Estimate for the Enterprise, Embedded and Semi-Custom segment’s third-quarter revenues is pegged at $1.80 billion. The projection suggests an increase of 58.3% from the figure reported in the year-ago quarter.

Computing and Graphics to Aid Top Line

AMD is expected to have witnessed steady demand for Ryzen processors in the third quarter due to the extension of the work-from-home and online-learning set up.

The consensus mark for revenues for this Zacks Rank #2 (Buy) company’s Computing and Graphics segment for the third quarter is pegged at $2.27 billion, which indicates an increase of 36.2% on a year-over-year basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, slowing PC shipments’ in the third quarter of 2021, due to component shortage, is expected to have hurt AMD’s performance in the to-be-reported quarter.

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