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AMD’s Q2 2021 revenue grew 99% to $3.85B on market share gains

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Advanced Micro Devices reported its revenues and earnings for the second quarter ended June 30 exceeded expectations with revenue growing 99% to $3.85 billion.

Non-GAAP net income for the quarter was $778 million, or 63 cents a share, beating expectations of 54 cents a share on a non-GAAP basis. AMD said it was increasing its annual earnings forecast and its shares are up 1% to $91.93 a share in after-hours trading.

The Santa Clara, California-based company has had a good run on momentum behind its Zen and Zen 2 architectures for processors, which can generate 50% or more better performance per clock cycle than the previous generation. This architecture put AMD ahead of Intel in performance for the first time in a decade and it has helped the perennial No. 2 PC chip maker into a fast-growing contender against Intel.

Intel, meanwhile, has had stumbles not only on the chip design side but also in manufacturing, where it has lost its technological advantage to rivals such as TSMC, which makes both processors and graphics chips for AMD. As a result, AMD has been making historic market share gains for the past three years. What’s interesting is AMD has been making these gains amid a historic chip shortage driven by the supply whipsaw from the pandemic and unprecedented demand for electronic goods.

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“Our business performed exceptionally well in the second quarter as revenue and operating margin doubled and profitability more than tripled year-over-year,” said AMD Lisa Su, in a statement. “We are growing significantly faster than the market with strong demand across all of our businesses. We now expect our 2021 annual revenue to grow by approximately 60% year-over-year driven by strong execution and increased customer preference for our leadership products.”

Intel, meanwhile, is doubling down on its manufacturing investments as a way to stay competitive and take advantage of the chip boom and supply shortage.

Q2 2021 results

Above: Min-Liang Tan holds the Razer Blade 14 with an AMD processor and Nvidia GeForce 3080 RTX graphics.

Image Credit: Razer

As noted, revenue was $3.85 billion, up 99% year-over-year and 12% quarter-over-quarter. That was driven by higher revenue in both the computing and graphics segment, as well as growth in the enterprise, embedded, and semi-custom segments. Analysts had expected revenues of $3.62 billion.

The gross profit margin was 48%, up 4 percentage points year-over-year and 2 percentage points quarter-over-quarter. The increases were driven by a richer mix of sales, including high-end Ryzen, Radeon, and Epyc processor sales. That means AMD is doing well across the board.

Non-GAAP net income was $778 million compared to $216 million a year ago and $642 million in the prior quarter. Non-GAAP diluted earnings per share was 63 cents compared to 18 cents a year ago and 52 cents in the prior quarter.

AMD now has $3.79 billion in cash, cash equivalents and short-term investments. Cash is coming into the company at a rate of $952 million per quarter, compared to $243 million a year ago and $898 million in the prior quarter.

Quarterly financial segment summary

AMD's Radeon RX 6800M GPU.

Above: AMD’s Radeon RX 6800M GPU.

Image Credit: AMD

Computing and graphics segment revenue was $2.25 billion, up 65% year-over-year and 7% quarter-over-quarter driven by higher client and graphics processor sales. Client processor average selling price (ASP) grew year-over-year and quarter-over-quarter driven by a richer mix of Ryzen desktop and notebook processor sales. It was the fifth straight quarter of record processor revenue.

Graphics processing unit (GPU) ASP grew year-over-year and quarter-over-quarter driven by high-end graphics product sales, including data center GPU sales. Operating income was $526 million compared to $200 million a year ago and $485 million in the prior quarter. The increases were primarily driven by higher revenue.

Enterprise, embedded and semi-custom segment revenue was $1.6 billion, up 183% year-over-year and 19% quarter-over-quarter. The increases were driven by higher Epyc processor revenue and semi-custom product sales. The semi-custom products include processors for the PlayStation 5 and Xbox Series X/S game consoles.

Current outlook

HPE Cray EX supercomputer uses AMD chips.

Above: HPE Cray EX supercomputer uses AMD chips.

Image Credit: HPE

For the third quarter of 2021, AMD expects revenue to be approximately $4.1 billion, plus or minus $100 million, an increase of approximately 46% year-over-year and approximately 6% quarter-over-quarter. The year-over-year increase is expected to be driven by growth across all businesses. The quarter-over-quarter increase is expected to be primarily driven by growth in AMD’s datacenter and gaming businesses. AMD expects non-GAAP gross margin to be approximately 48% in the third quarter of 2021.

For the full year 2021, AMD now expects revenue growth of approximately 60%, up from prior guidance of approximately 50%, driven by strong growth across all businesses. AMD now expects non-GAAP gross margin to be approximately 48% for the full year 2021, up from prior guidance of 47%.

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