AMD share price estimated to rise on the previous quarter

Refinitiv estimates the company’s Q2 earnings per share to be US$0.54, a 3.8% increase from the previous quarter

Advanced Micro Devices is set to release its financial results for the second quarter on 27 July, after market closes. Refinitiv estimates its Q2 earnings per share to be US$0.54, a 3.8% increase from the previous quarter.

AMD has benefited from the pandemic, amid strong demand for all its products such as consoles, PCs and server CPUs. The company’s revenue from the third quarter of 2020 saw a surge, which continues into 2021, although growth sequentially may have slowed slightly as economies across the world shift towards normalisation.

In the PC segment, the company’s revenue is growing significantly faster than the overall market, potentially suggesting some gains in market share compared to other big players in the market such as Intel Corp.

The company’s strength in seven nanometre-based processors, manufactured by Taiwan Semiconductor Manufacturing Co Ltd – ADR, may continue to provide it with an edge over Intel with its focus on the premium segments, rather than low-end units. This may have been reflected in its gross margins, which have risen steadily over the past three quarters, which may be due to higher average selling prices for its premium products.

Investors will be on watch for whether the growth momentum continues into the upcoming results, as demand continues to outstrip supply.

Management expects the upcoming revenue for the second quarter to be nearly US$3.6 billion, plus or minus US$100 million, which marks a nearly 86% growth year-on-year (YOY) and 4% rise from the first quarter.

AMD’s recent approval to conduct US$4 billion in share repurchases may be a validation of management’s confidence in the businesses growth ahead, as operating cashflow seems to notice a huge improvement since Q2 2020. A further boost in cashflow in the subsequent quarters may lead to more capital distribution back to shareholders, after its first major step in share purchases.