Advanced Micro Devices (AMD, Financial) announced better-than-expected earnings for its first fiscal quarter, with a robust revenue outlook for the current quarter. The company's data center segment, which includes AI graphics chips and CPUs, saw a 57% increase in sales, surpassing expectations. Despite an $800 million cost due to U.S. export restrictions on some AI chips, AMD's stock rose over 4% in after-hours trading.
In the quarter ending March 29, AMD reported adjusted earnings per share of $0.96, beating the expected $0.94, and revenue of $7.44 billion, exceeding the anticipated $7.13 billion. For the current quarter, AMD projects sales of approximately $7.4 billion with a gross margin of 43%, while Wall Street estimates an adjusted EPS of $0.86 and sales of $7.25 billion.
Net income was $709 million, or $0.44 per diluted share, compared to $123 million, or $0.07 per share, a year earlier. Revenue increased 36% year-over-year. AMD, the second-largest server CPU supplier after Intel, has gained market share with its Epyc processors. The company is also a strong competitor to Nvidia in the large GPU market, with AI GPU sales reaching $5 billion in fiscal 2024.
The data center segment's revenue hit $3.7 billion, driven by demand for Epyc processors and Instinct GPUs. The client and gaming segment saw a 28% revenue increase to $2.9 billion, with laptop and PC chip sales up 68% due to strong Zen 5 chip demand. However, gaming sales fell 30% due to decreased console chip revenue. The embedded segment, mainly from the Xilinx acquisition, saw a 3% revenue decline to $823 million.
