AMD earnings beat as overall sales surge by 36%

Core Viewpoint - Advanced Micro Devices (AMD) reported strong first fiscal-quarter earnings that exceeded expectations, with a positive forecast for the current quarter revenue, leading to a more than 4% increase in shares during extended trading [1][2]. Financial Performance - AMD's net income for the quarter was $709 million, or 44 cents per diluted share, compared to $123 million, or 7 cents per share, in the same period last year, reflecting a significant annual growth [2]. - Revenue increased by 36% year-over-year, reaching $7.44 billion, surpassing Wall Street expectations of $7.13 billion [7]. Segment Performance - The data center segment generated $3.7 billion in sales, up 57% year-over-year, driven by demand for Epyc processors and Instinct GPUs [4]. - The Client and Gaming segment rose 28% year-over-year to $2.9 billion, with client revenue (laptop and PC chips) surging 68% due to strong demand for Zen 5 chips, although gaming sales declined by 30% due to reduced console chip revenue [5]. - The embedded segment, primarily from the acquisition of Xilinx, saw a 3% decline year-over-year to $823 million [6]. Future Outlook - For the current quarter, AMD anticipates approximately $7.4 billion in sales with a gross margin of 43%, exceeding Wall Street's estimates of $7.25 billion in sales [1][2]. - The forecast includes $800 million in costs related to U.S. export limitations on certain AI chips [2]. Market Position - AMD holds the second position in the server CPU market, trailing Intel, while its Epyc processors have been gaining market share [3]. - The company is a key competitor to Nvidia in the AI GPU market, achieving $5 billion in AI GPU sales in fiscal 2024 [3].