(Bloomberg) — Advanced Micro Devices Inc. gave a strong sales forecast for the current quarter, indicating that it continues to win in its most lucrative market: data-center chips.
AMD predicted second-quarter sales of roughly $6.5 billion, compared with an average analyst estimate of $6.03 billion. The company’s forecast includes a contribution from its acquisition of Xilinx Inc., which it completed in the first quarter.
AMD — the second-biggest maker of computer processors, behind Intel Corp. — is on pace to end 2022 almost four times bigger than it was in 2019, measured by revenue. New products and better execution have fueled market-share gains against its larger rival.
Shares of AMD rose about 4% in late trading following the announcement Tuesday. The stock had dropped 37% this year, part of a broader pullback in semiconductor shares. Investors have been particularly wary of chipmakers such as AMD that have made rapid gains over the past three years. The stock closed at $91.13 in New York.
AMD’s outlook contrasts with a recent forecast from Intel, which was hurt by accumulation of inventory at some PC customers. The return of Covid-related lockdowns in parts of China also has squeezed the supply of components needed to complete devices, Intel said. Other chipmakers, such as Texas Instruments Inc., have said those disruptions are hurting growth as well.
Under Chief Executive Officer Lisa Su, AMD has developed leading-edge components and outsourced production — something her predecessors struggled to do. That’s led more chip customers to ditch Intel in favor of AMD. But Intel CEO Pat Gelsinger, who took the helm last year, is now claiming his company is offering better PC processors than AMD and will take back market share.
Unlike Intel, which manufactures its products in-house, AMD works with Taiwan Semiconductor Manufacturing Co., giving it access to better technology. Using the latest chipmaking techniques can improve the way chips process data and how much information they store.
While TSMC has surpassed Intel in technological capabilities, it has struggled to meet demand for chips. But AMD has an edge over other TSMC customers. Its products are some of the most expensive items coming out of the Taiwanese factories, in theory making it better placed to get the supplies it needs.
AMD is also the second-largest maker of graphics chips used in add-on cards by PC gamers. It competes in that market with Nvidia Corp. and will face fresh opposition from Intel, which has begun offering products for that segment for the first time in years.
AMD, based in Santa Clara, California, supplies graphics chips used in Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation.
AMD reported first-quarter earnings of $1.13 a share, excluding some items, well ahead of the 92-cent estimate. Sales rose 71% to $5.9 billion, topping projections of $5.3 billion. The first quarter also included contributions from Xilinx.
The chipmaker is predicting annual revenue of $26.3 billion for 2022, a gain of 60% from the prior year. That compares with an average estimate of $24.1 billion.
AMD is gaining ground at the largest buyers of computer processors, owners of the giant data centers that are the backbone of the internet. Some 48% of all new processors installed in these data centers were bought from AMD in March, according to Jefferies & Co. analyst Mark Lipacis.
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