Advanced Micro Devices, Inc. (NASDAQ: AMD) shares rose 8.2 percent to $15.27 in after hours trading following a report of its second quarter earnings on Tuesday.
AMD reported a 19 percent increase in revenue to $1.22 billion, compared to analysts’ expectations of $1.16 billion, and beat on EPS by 2 cents. The company raised its full year forecast, betting on demand for its graphics chips and Ryzen processors and expecting annual revenue to increase by “a mid to high teens percentage” rather than its previous outlook of low double-digit percentage revenue growth, according to Business Insider.
"AMD has a lot to look forward to as none of their actuals incorporates sales of EPYC server parts, only limited sales of the new Radeon Vega and none of the Ryzen notebook parts," Moorhead, founder and principal analyst of Moor Insights & Strategy, said.
The corporation also noted that it expects third quarter revenue to increase by about 15 percent year over year, which would produce revenue of $1.50 billion.
According to analysts, the new family of EPYC processors was launched only at the end of June, which means the new chips did not contribute to Q2 results considerably. Therefore, the next quarter will provide more information about the success of the server business with the new chips. The results will likely define the company’s future for the coming years, since AMD aims to take at least 10% of the market share in servers, which would represent about $2.1 billion in revenue for the corporation.
In June, the stock surged after AMD noted that the rise in digital currency prices was a leading cause in increasing demand for its graphic chips. As the trend is expected to slow in the near future, AMD should boost their sales in the gaming market to offset the decline. Moreover, it is reported other companies like Nvidia Corp. (NASDAQ: NVDA) will reveal special hardware that will be tuned specifically for mining, which means AMD’s share in the crypto currencies market will probably be reduced. Therefore, the next quarter also will show how successful the company’s cards are without a huge demand by miners.