Advanced Micro Devices, Inc. (NASDAQ:AMD) stock rose 1.56% (As on Oct 27, 11:03:56 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the third quarter of FY 21 and gave a strong forecast for the fourth quarter. AMD’s computing and graphics segment, reported $2.4 billion in revenue, up 44% year-over-year. AMD’s Embedded, Enterprise, and Semi-custom segment has reported $1.9 billion in sales in this important category, up 69% year-over-year driven by Epyc server chips, and higher “semi-custom” sales, which are the semiconductors it sells to game console makers. AMD is in the process of taking market share in the server market behind its Epyc processors, as giants like Microsoft and Google buy its chips to run their cloud services. AMD’s data center sales have doubled year-over-year and now represents “mid-20s” of overall AMD revenue. AMD continues to keep its costs under control and increase its profitability. It posted gross margin of 48%, up from 44% in the same period last year because customers are buying more expensive processors. It forecast gross margins at 49.5% in the fourth quarter. AMD’s net income for the quarter was $893 million compared to $501 million a year ago.
AMD in the third quarter of FY 21 has reported the adjusted earnings per share of 73 cents, beating the analysts’ estimates for the adjusted earnings per share of 67 cents, according to estimates from Refinitiv. The company had reported the adjusted revenue growth of 54 percent to $4.31 billion in the third quarter of FY 21, beating the analysts’ estimates for revenue of $4.12 billion. Non-GAAP operating income was $1.1 billion compared to $525 million a year ago and $924 million in the prior quarter. Cash, cash equivalents and short-term investments were $3.6 billion at the end of the quarter.
Additionally, the company has repurchased $750 million in shares during the quarter.
AMD expected $4.5 billion in sales in the fourth quarter, ahead of analyst expectations of about $4.25 billion in sales in the quarter. AMD is forecasting 39% annual growth in the fourth quarter.
Meanwhile, the company had announced its plans to buy Xilinix in a deal worth $35 billion that would give the company more firepower to compete with Intel in the data center chip market. AMD said the deal is still on track to close by the end of 2021 and the company is making “good progress” to securing regulatory approvals.