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Advanced Micro Devices, Inc. (AMD) Earnings Beat Estimates, Stock Slumps

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Advanced Micro Devices, Inc. (NASDAQ:AMD) released its Q4 2017 earnings report after closing bell tonight. AMD earnings came in at 8 cents per share on a non-GAAP basis, while revenue grew to $1.48 billion. Analysts had been expecting the chip maker to report earnings of 5 cents per share on $1.4 billion in revenue. In the same quarter a year ago, AMD reported $1.11 billion in sales and non-GAAP losses of 1 cent per share.

AMD earnings beat estimates

On a GAAP basis, AMD earnings amounted to 6 cents per share, compared to the 6 cents per share the company lost in the year-ago quarter. Advanced Micro Devices said strong sales of its Radeon graphics and Ryzen processors drove the 34% year-over-year increase in sales. The company’s gross margin rose 3 percentage points year over year to 35%.

Computing and Graphics sales jumped 60% year over year to $958 million on the back of strength in AMD’s Radeon and Ryzen line-up. The client average selling price for the segment grew as the average selling price for AMD’s Ryzen desktop processors and GPUs grew. Investors may be concerned about this because several analysts have taken issue with the fact that much of the increase in demand that the chip maker has enjoyed has come from the cryptocurrency mining market, which they do not see as sustainable demand. Meanwhile, Enterprise, Embedded and Semi-Custom revenues ticked up to $522 million from $506 million a year ago.

AMD stock slumps despite strong guidance

Advanced Micro Devices also offered updated guidance with its Q4 2017 earnings release. AMD expects Q1 2018 revenues to come in at around $1.55 billion, plus or minus $50 million. That represents a 32% year-over-year increase driven by the strong ramp of the chip maker’s new Ryzen, GPU and EPYC lines. The chip maker’s guidance falls under the new accounting standards for revenue recognition.

Although the AMD earnings results were stronger than expected, AMD stock tumbled in after-hours trade falling by more than 5% to as low as $12.15 after the bell.