AMD Expects Double-Digit Growth In 2020 Despite COVID-19 'Uncertainty'
'While we expect some uncertainty in the near-term demand environment, our financial foundation is solid and our strong product portfolio positions us well across a diverse set of resilient end markets,' AMD CEO Lisa Su says in the company's first-quarter earnings.
AMD said it still expects full-year revenue for 2020 to grow more than 20 percent on the strength of its Ryzen and EPYC processors despite "some uncertainty in the near-term environment" caused by the coronavirus pandemic.
The Santa Clara, Calif.-based company on Tuesday reported 40 percent year-over-year growth for its first-quarter revenue of $1.79 billion, which was on the lower range of the company's guidance, as AMD predicted in early March, due to a "modest" hit from the pandemic. Like revenue, the company's net earnings of 18 cents per share were in line with Wall Street's expectations.
[Related: AMD Reveals CDNA Server GPU Architecture, Updated EPYC Roadmap]
AMD's results came out a few days after rival Intel reported strong growth in its PC and data center businesses, driven by the pandemic-induced work-from-home rush and demand for cloud services, but pulled guidance for full-year revenue, casting uncertainty on continued growth prospects.
The company is keeping its guidance for full-year revenue growth in place, but the firm revised the 2020 figure slightly downward, from a range of 28-30 percent to roughly 25 percent, plus or minus 5 percentage points, as a result of "weaker COVID-19 consumer demand" in the second half of the year.
AMD's stock price was down more than 4 percent in after-hours trading.
"We executed well in the first quarter, navigating the challenging environment to deliver 40 percent year-over-year revenue growth and significant gross margin expansion driven by our Ryzen and EPYC processors," Lisa Su, AMD's president and CEO, said in a statement. "While we expect some uncertainty in the near-term demand environment, our financial foundation is solid and our strong product portfolio positions us well across a diverse set of resilient end markets."
The chipmaker's Computing and Graphics segment revenue was $1.44 billion, a 73 percent increase over the same period last year and 13 percent lower from the previous quarter. The company said the year-over-year growth was driven by "strong" channel sales for its Ryzen processors and Radeon graphics cards. However, the sales for graphics cards were lower than previous periods.
Like Intel, AMD reported an increase in laptop processor sales, which conversely dragged down the average selling price from the previous quarter.
On the Enterprise, Embedded and Semi-Custom side, AMD reported $348 million in revenue, a 21 percent year-over-year decrease and a 25 percent decline from the previous quarter. The company attributed the decline due to lower semi-custom sales, which the company had previously predicted due to Sony's PlayStation 4 and Microsoft's Xbox One game consoles reaching the end of their lifecycle. AMD said that lower semi-custom sales, however, were "partially offset by higher EPYC processor sales," without providing any further details.
More than a month ago, AMD CEO Lisa Su said the company has a "world-class global supply chain" and is "well positioned" to weather the impact of the pandemic. In early March, she said the company expected a "modest" impact on revenue as a result of the pandemic but not enough to alter forecasts.
Research firm IDC predicted in March that global semiconductor revenues would experience a "significant contraction" this year to the economic impacts of the pandemic.