AMD meets Q1 expectations with growth in computing and graphics

Computing and Graphics revenue was up 73 percent year-over-year, thanks to strong Ryzen processor and Radeon product channel sales.

AMD reported solid first quarter financial results on Tuesday, delivering 40 percent year-over-year revenue growth driven by higher Computing and Graphics segment revenue.

First quarter non-GAAP net income came to $222 million, with diluted earnings per share of 18 cents, on revenue of $1.79 billion. 

Analysts were looking for earnings of 18 cents on revenue of $1.78 billion. 

"We executed well in the first quarter, navigating the challenging environment to deliver 40 percent year-over-year revenue growth and significant gross margin expansion driven by our Ryzen and EPYC processors," Dr. Lisa Su, AMD president and CEO, said in a statement. "While we expect some uncertainty in the near-term demand environment, our financial foundation is solid and our strong product portfolio positions us well across a diverse set of resilient end markets. We remain focused on strong business execution while ensuring the safety of our employees and supporting our customers, partners and communities. Our strategy and long-term growth plans are unchanged."

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Computing and Graphics segment revenue came $1.44 billion, up 73 percent year-over-year. The growth was driven by strong Ryzen processor and Radeon product channel sales. 

Enterprise, Embedded and Semi-Custom segment revenue was $348 million, down 21 percent year-over-year primarily due to lower semi-custom sales. It was partially offset by higher Epyc processor sales. 

Patrick Moorhead, president of Moor Insights & Strategy, highlighted AMD's double-digit quarter-over-quarter growth in Epyc server sales. 

"I attribute most of this growth to cloud service and SaaS players embracing the platform more and more," he said. "The company believes it did take unit market share and I will be interested in seeing if it comes through."

For the second quarter, AMD expects total revenue of approximately $1.85 billion, plus or minus $100 million. 

AMD is slightly lowering its revenue expectations for the full year due to the impact of the COVID-19 pandemic on consumer demand in the second half of the year. It now expects 2020 revenue to grow by approximately 25 percent, plus or minus 5 percent points, compared to 2019. In January, the company gave a growth outlook of approximately 28 percent to 30 percent.

"The biggest variable is the PC business in its entirety," Su said in a conference call Monday with respect to the rest of the year. "When you look at the other markets -- game consoles, data center -- we're about where we expected, and the signals continue to be positive in those areas."