The chip "upstart" AMD, which had the biggest annual gains in the S & P 500 for two consecutive years in 2018 and 2019, released its third-quarter results for fiscal 2021 after US stocks opened on Tuesday, October 26th.

AMD rose nearly 4% in intraday trading on Tuesday, breaking a record high of $127, closing up 0.5%, rising for five consecutive days and generating an all-time high of $123. AMD is up 34% so far this year, outperforming the s & p 500 and the Philadelphia semiconductor index of more than 20% over the same period.

Due to better-than-expected revenue and earnings in the third quarter and strong guidance in the fourth quarter, the stock rose nearly 2% at one point in after-hours trading.

AMD shares have soared in the past few weeks, driven by growing demand for chips that have long shifted to the cloud in the data centre and PC markets, narrowing the gap between AMD's market capitalization and that of rival Intel Corp, which this summer was half of its market capitalisation and now stands at nearly 76 per cent.

Revenue increased by 54% compared with the same period last year.Exceed expectations, non-GAAPOperating profit doubled, gross profit rose by more than 4%One percentage point

AMD reported third-quarter revenue of $4.3 billion, above the company's official upper limit of $4.2 billion and above analysts' expectations of $4.12 billion, up 54 per cent from a year earlier and 12 per cent from a month earlier. Adjusted EPS was 73 cents per share, higher than expected of 67 cents and 63 cents in the second quarter, up 78 percent from a year earlier.

Gross profit margin for the quarter jumped more than 4 percentage points year-on-year to 48%, up 0.8% from the second quarter, mainly due to a richer sales mix of PC, data center and game console chips such as EPYC, Ryzen and Radeon.

Non-GAAP operating profit was $1.1 billion, double that of the same period last year and up from $924 million in the second quarter. Non-GAAP net profit was $893 million, up 78 per cent from a year earlier and nearly 15 per cent month-on-month. Free cash flow fell to $764 million from a record high of $888 million in the second quarter. It also bought back $750 million of shares in the quarter.

AMD expects fourth-quarter revenue to rise to $44 billion to $46 billion month-on-quarter, higher than analysts' expectations of $42.5 billion, and gross profit margin is also expected to rise to about 49.5% month-on-month, basically in line with expectations. Full-year revenue is expected to increase by about 65% year-on-year, higher than the company's previous forecast of about 60%, full-year adjusted gross profit margin is expected to be about 48%, analysts expected 47.9%.

Data center sales double year-on-year, third-generation EPYCSignificant increase in processor shipments

From a business perspective, the computing and graphics division, which houses desktop and notebook processors, had revenue of US $2.4 billion in the third quarter, up 44% from the same period last year and 7% from the same period last year. Driven by the growth in sales of Ruilong, Radius and AMD Instinct processors, the average selling price (ASP) of client CPU and GPU increased year-on-year and month-on-month.

The enterprise, embedded and semi-custom divisions, which include data centers and video game console chips, earned $1.9 billion, up 69% year-on-year and 20% month-on-month, and continued to be driven by higher sales of EPYC processors and semi-custom products. The division's operating profit rose 284 per cent year-on-year to $542 million, nearly quadrupling the $141 million in the same period last year.

Dr. Dr. Lisa Su, President and CEO of AMD, said in a public statement that the company recorded another record quarter, with revenue up 54% year-on-year and operating profit doubling year-on-year:

Shipments of third-generation EPYC processors increased significantly in the third quarter as data center sales doubled year-on-year. Our business accelerated significantly in 2021, outpacing the overall industry and market, mainly based on leading products and consistent execution. "

The hot demand for game consoles helps the revenue of semi-custom chips continue to grow, and the acquisition of Xilinx is expected to be completed by the end of next year.

In the subsequent earnings call, Su Zifeng said that the increasing adoption rate of AMD's EPYC server chips by the cloud services giants Amazon.Com Inc, Microsoft Corp and Alphabet Inc-CL C has increased the company's share of the server processor market, and data center sales have accounted for more than 1 / 5 of AMD's total revenue. At the same time, the demand for the latest Microsoft Corp Xbox and Sony Group Corp Playstation 5 game consoles is very strong, and semi-custom chip revenue in the fourth quarter is expected to continue to grow month-on-month and year-on-year as AMD further increases supply to meet demand.

Executives also acknowledged that demand for personal computers (PC) remained strong, but was held back by supply shortages. In September, Su Zifeng predicted that the severe global semiconductor shortage would last until 2022, but the situation would ease in the second half of next year, as more than 20 new chip factories in the industry are expected to start production this year. Another 20 plants are in the planning stage to help ease the supply shortage.

AMD announced in its financial results in the third quarter of last year that it planned to acquire Xilinx, the world's largest maker of programmable logic components, for $35 billion in all shares, not only to expand its business into markets such as 5G communications and automotive electronics, to boost its custom chip business, but also to compete with NVIDIA Corp in the data center field.

The deal was expected to be completed by the end of the year, but is still awaiting regulatory approval. AMD said today that one of the largest deals in the chip industry was still expected to be completed by the end of 2022 and that "good progress" was being made in obtaining regulatory approval.

Wall Street: AMDEnjoy victory on the important "battlefield" of Intel Corp's defeat, such as gross profit margin and data center sales.

Prior to the release of the results, industry analysts reiterated their optimism about the future of AMD, referring in particular to the potential growth of the newly released AMD EPYC 7003 series of high-performance microprocessors based on the Zen3 microarchitecture (code-named "Milan").

Ultra-large-scale companies and cloud providers are taking the lead in adopting Milan chips, and local companies' adoption of Milan is expected to follow in the next few years as corporate spending recovers and customers gain more chip experience in the cloud, analysts Goldman Sachs Group said in a research report on Oct. 24. Coupled with the release of Genoa next year (CPU, a next-generation server based on Zen4's core architecture), it reiterates its "buy" rating on AMD, and its market share will continue to rise in the foreseeable future.

It was also mentioned that AMD is enjoying victory in the important "battlefields" of Intel Corp's losses, such as gross profit margin and data center sales, and that its share price will show an ebb-and-flow relationship with Intel Corp. Intel Corp said on an unpopular earnings call last week that profit margins would remain slightly above 50 per cent over the next few years, while analysts are still worried about falling margins, while AMD's gross margin is rising and approaching 50 per cent.