Revenue up 12% from last quarter to $4.8 billion, profit up 5.5% Q-Q.

AMD reported record quarterly revenue of $4.8 billion, up 49% year-over-year, and record full-year revenue of $16.4 billion, up 68%. Gross margin expanded and operating income more than doubled from the prior year.

“2021 was an outstanding year for AMD with record annual revenue and profitability,” said AMD President and CEO Dr. Lisa Su. “Each of our businesses performed extremely well, with data center revenue doubling year-over-year driven by the growing adoption of AMD EPYC processors across cloud and enterprise customers. We expect another year of significant growth in 2022 as we ramp our current portfolio and launch our next generation of PC, gaming, and data center products.”

The gross margin was 50%, an increase of more than 5 percentage points year-over-year and approximately 2 percentage points quarter-over-quarter. The year-over-year and quarter-over-quarter increases were primarily driven by a richer product mix.

Operating income was $1.2 billion compared to $570 million a year ago and $948 million in the prior quarter. Non-GAAP operating income was $1.3 billion compared to $663 million a year ago and $1.1 billion in the prior quarter. Operating income improvements were primarily driven by higher revenue and gross margin expansion.

Net income was $974 million compared to $1.8 billion a year ago, which included a $1.3 billion income tax benefit associated with a valuation allowance release, and $923 million in the prior quarter. Non-GAAP net income was $1.1 billion compared to $636 million a year ago and $893 million in the prior quarter.

Computing and Graphics

Computing and Graphics segment revenue was $2.6 billion, up 32% year-over-year and up 8% quarter-over-quarter. The year-over-year and quarter-over-quarter increases were driven by Ryzen and Radeon processor sales.

Client processor average selling price (ASP) increased year-over-year and quarter-over-quarter due to a richer mix of Ryzen processor sales.

GPU ASP increased year-over-year primarily driven by Radeon product sales and decreased quarter-over-quarter due to product mix.

Enterprise, Embedded, and Semi-Custom

Enterprise, Embedded, and Semi-Custom segment revenue was $2.2 billion, up 75% year-over-year and 17% quarter-over-quarter driven by higher EPYC and semi-custom processor sales.

Operating income was $762 million compared to $243 million a year ago and $542 million in the prior quarter. Operating income improvements were primarily driven by higher revenue and richer product mix, partially offset by higher operating expenses.

All Other operating loss was $121 million as compared to operating losses of $93 million a year ago and $107 million in the prior quarter.

Margin

The gross margin was 48%, an increase of more than 3 percentage points over 2020. Gross margin expansion was driven by a richer mix of EPYC, Radeon, and Ryzen processor sales.

AMD announced it received approval from the State Administration for Market Regulation (SAMR) of the People’s Republic of China for the acquisition of Xilinx. AMD anticipates that the acquisition will close in the first quarter of 2022.

The company announced new updates to its graphics processor lineup and software portfolio, including new AMD Radeon RX 6000M Series and AMD Radeon RX 6000S Series mobile graphics for premium and thin-and-light gaming laptops, three new AMD Radeon RX 6000 Series desktop graphics cards for 1080p gaming, and AMD Radeon Super Resolution, a new driver-based spatial upscaling technology available in the upcoming update to the AMD Software: Adrenalin Edition application.

It introduced the new AMD Instinct MI200 series accelerators, the fastest accelerator for HPC and AI applications. The MI200 series accelerators are powering Oak Ridge National Laboratory’s Frontier supercomputer, the first Exascale supercomputer in the United States.

In the latest Top500 list, AMD now powers 73 supercomputers, a more than 3× increase compared to the November 2020 list. AMD also powers 4 out of the top 10 most powerful supercomputers in the world, as well as the most powerful supercomputer in EMEA.

Outlook

For the first quarter of 2022, AMD expects revenue to be approximately $5.0 billion, plus or minus $100 million, an increase of approximately 45% year-over-year and approximately 4% quarter-over-quarter. The year-over-year increase is expected to be driven by growth across all businesses. The quarter-over-quarter increase is expected to be driven by higher server and client processor revenue. AMD expects non-GAAP gross margin to be approximately 50.5% in the first quarter of 2022.

For the full year 2022, AMD expects revenue to be approximately $21.5 billion, an increase of approximately 31% over 2021 driven by growth across all businesses. AMD expects non-GAAP gross margin to be approximately 51% for 2022.

What do we think?

AMD has its sights set on Intel’s server CPU market share, and its EPYC server chips have proved to be comparable or superior to certain Intel chips in many benchmark tests. In addition to a great and scalable CPU design, the company has been able to leverage TSMC’s leading-edge process technologies.

However, Nvidia is ahead of AMD in GPU market share and owns the high-end. The company has been extremely successful in moving its GPUs into adjacent end markets such as artificial intelligence. And Intel is still the dominant player in the processor market which gives it long-term advantages.