AMD forecasts revenue above estimates on strong chip demand

Advanced Micro Devices Inc forecast current-quarter revenue above Wall Street expectations on Tuesday, as it sees strong demand for its chips used in data centers and gaming consoles.

Shares of the Santa Clara, California-based company rose nearly 2% in extended trading after the chip designer also reported second-quarter revenue and profit beat above estimates.

Although, AMD has been more constrained than rivals like Intel Corp by supply chain bottlenecks, including a shortage of raw materials like substrates, it has averted damage to revenue by selling its higher-end chips used in servers, PCs and notebooks.

AMD Chief Executive Officer Lisa Su said that though supply chain is tight, the company have been planning well with its partners.

“We do have confidence that we can continue to grow substantially as we go into the second half of this year and into 2022 with the supply chain,” said Su.

AMD projected third-quarter revenue of about $4.1 billion, plus or minus $100 million, compared with analysts’ estimates of $3.82 billion, according to Refinitiv IBES data.

The company’s revenue for the second quarter almost doubled to $3.85 billion. Analysts on average had expected $3.62 billion.

Sales in AMD’s computing and graphics segment, which includes graphic chip sales to data centers, rose 65% to $2.25 billion, beating analysts’ estimate of $2.17 billion, according to market research firm FactSet.

Its enterprise, embedded and semi-custom segment, the unit that houses data center chips, jumped nearly three-fold in sales to $1.60 billion.

“We believe that the data center business will continue to be a strong driver for us into the second half of the year,” Su told analysts on a conference call.

Excluding items, the company earned 63 cents per share in the quarter, above estimates of 54 cents, according to Refinitiv IBES data.