Advanced Micro Devices, Inc. (NASDAQ:AMD) Takes Fight To Intel Corporation (NASDAQ:INTC) and NVIDIA Corporation (NASDAQ:NVDA) After Stellar Q1 Results

Advanced Micro Devices, Inc. (NASDAQ:AMD) stock rallied after the company provided a second-quarter forecast that topped estimates. Investors also pushed the stock higher on the chipmaker posting first-quarter financial results that beat Wall Street expectations.

AMD Q1 Financial Results

The company reported earnings of 11 cents a share, beating analysts’ estimates of 9 cents a share. Last year, the company reported a net loss of (-$0.04) a share. Revenue in the first quarter was up 40%, to $1.65 billion and in the process beat Wall Street estimates of $1.57 billion.

Revenue growth was attributed to growth in the Graphics business Segment that posted revenues of $1.12 billion representing a 95% increase. Revenue could have been much higher had the Enterprise and Semi-Custom segment not posted a 12% drop in revenue that came in at $532 million. AMD attributes the decline to a drop in semi-custom revenue.

AMD also reported solid margins for the first quarter that came in at $36%, compared to 4% as of the end of the first quarter of last year. Lead operating income stood at $120 million compared to just $11 million. After struggling for almost a decade to post profits, AMD reported $114 million increase in net income that came in at $81 million.

For the current quarter, the company said it is expecting $1.72 billion in revenue compared to estimates of $1.58 billion. Blockchain accounted for 10% of the company’s revenue. However, the chip giant has warned of a potential decline in graphics revenue in connection to the blockchain.

Revenue Growth Drivers

Stellar first-quarter earnings and a positive second-quarter outlook underscores the success that AMD is getting with its Ryzen and Vega-based GPUs. AMD is increasingly becoming Ryzen driven company given that 60% of its revenue came from the sales of Ryzen products. The company is also benefiting from an increase in the prices of average desktop chip

The chip giant is already taking the fight to the likes of Intel Corporation (NASDAQ: INTC) with its Epyc server chips as it looks to gain market share in the lucrative marketplace. According to the Chief Executive Officer, Lisa Su, the company is poised to control mid-single-digit server unit share before the end of the year.

“I will say, for the first-generation Epyc, we’re seeing really nice customer interest, and it’s quite broad. And so it is across enterprise as well as the hyper-scale customers. And we view this as a multigenerational play, so we’re very excited about what Epyc can do over the next couple of quarters,” Su saidda.

AMD is slowly gaining a competitive edge against its fierce rivals after stealing market share from NVIDIA Corporation (NASDAQ: NVDA) in the graphics card market The Company also stole some market share from Intel in the Desktop chip market.

Focus going forward is on the launch of the second and third generation of the Epyc chips with production set for early next year. In addition to the Epyc Chip AMD continues to attract interest from companies with large data centers testing out its AMD Radeon graphics cards designed to handle artificial intelligence workloads.