AMD reports highest revenue in more than a decade, but slightly light forecast makes stock volatile

Advanced Micro Devices Inc. reported its highest quarterly sales in more than a decade Tuesday, but a forecast that came in slightly below expectations sent shares on a see-saw in late trading.


AMD, -1.96%

 reported third-quarter net income of $120 million, or 11 cents a share, compared with $102 million, or 9 cents a share, in the year-ago period. Adjusted earnings were 18 cents a share. Revenue rose to $1.8 billion from $1.65 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast adjusted earnings of 18 cents a share on revenue of $1.81 billion.

Read: It’s not just Texas Instruments, Morgan Stanley warns

“Our first full quarter of 7nm Ryzen, Radeon and Epyc processor sales drove our highest quarterly revenue since 2005, our highest quarterly gross margin since 2012 and a significant increase in net income year-over-year,” said Lisa Su, AMD president and chief executive, in a statement.

In chip parlance, nanometers, or nm, refers to the size of the transistors that go on a computer chip, with the general rule being that smaller transistors are faster and more efficient in using power.

“AMD is thriving,” said Patrick Moorhead, principal analyst at Moor Insights and Strategy, in emailed comments. “These numbers were driven by the first full quarter for its new 7nm parts, including Ryzen, Radeon and Epyc.”

Moorhead noted that AMD’s “PC group comprised of Ryzen processors and Radeon graphics led the charge with an eye-popping 36% growth,” and that “Epyc sales grew over 50% sequentially signaling to me that the big volume ramp has finally commenced.”

Read: Semiconductor sales numbers, whispers out of Asia tell different tales about chip market

AMD expects fourth-quarter revenue of $2.05 billion to $2.15 billion, while analysts on average had forecast revenue of $2.15 billion, according to FactSet.

Shares were volatile in the extended session Tuesday, rising 3% before falling as much as 2%. After hours, the stock was last up 1%. The stock closed with a 2% decline in the regular session at $33.03. In comparison, the S&P 500 index

SPX, -0.08%

 closed down 0.1%, the tech-heavy Nasdaq Composite Index

COMP, -0.59%

declined 0.6%, and the PHLX Semiconductor Index

SOX, -0.90%

 fell 0.9% Tuesday.

AMD’s report follows Intel Corp.’s

INTC, -0.74%,

where shares rallied after the larger chip maker gave an optimistic forecast, and gains in shares of NXP Semiconductors NV

NXPI, +5.30%

which also reported strong results. On the other hand, results from chip makers Texas Instruments Inc.

TXN, +0.24%

 and Xilinx Inc.

XLNX, -2.55%,

 which were not as optimistic.

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