AMD Had A Strong Third Quarter Despite Lower GPU Sales

Even though the revenue increased by 4 percent, the company missed its target by $50 million


AMD recently announced its financial results for the third quarter of the year, and while the revenue has increased 4 percent year-over-year to $1.65 billion, it is a little less than last quarter’s revenue of $1.76 billion and $50 million shy of its revenue target. However, the gross margin increased by 40 percent, which is a big feat for the CPU maker as margins have not been satisfactory over the last few years.

GPU Sales Take A Hit Because Of The Crypto Mining Slowdown

Operating income grew 26 percent to $150 million, and net income increased 67 percent to $102 million. This translates into earnings per share of 9 cents. AMD attributes its fifth consecutive strong quarter to the popularity of Ryzen, EPYC and data center graphics products. Statistically speaking, the Computing and Graphics revenue was up 12 percent to $938 million. Demand for client and server processors remained strong, but the graphics channel sales took a hit because of decreased crypto mining activity. AMD is likely to be left with a glut of products and this could affect the next quarter negatively.

New Ryzen desktop processors and EPYC Server Products, and IP related revenue accounted for 50 percent of the gross margin increase. The figure would have been 38 percent without the IP-related revenue, but that wouldn’t have been a significant difference.

The new second-generation Ryzen desktop chips that feature the Zen-based architecture can handle 52 percent more instructions per clock than the last generation, and since the AMD’s main competitor Intel hasn’t been making any strides lately, it is safe to assume that AMD’s new processors have the lion’s share of the market.

The Enterprise, Embedded and Semi-Custom division displayed a 7 percent quarter-over-quarter increase, with the revenue coming in at $715 million. However, this is a 5 percent decrease from last year, and this could be explained by the decrease in semi-custom product and IP-related revenue. This was partially compensated for by higher server sales.

Positive Outlook For The Next Quarter

AMD expects to post revenue of $1.45 billion, plus or minus $50 million, for the next quarter, which is an 8 percent increase over last year’s Q4. The revenue growth will expectedly be driven by the sales of Ryzen, EPYC, and datacenter GPU processors.