AMD Gives Bullish Forecast, Raises 2021 Revenue Outlook

Advanced Micro Devices Inc. gave a strong second-quarter sales forecast indicating the chipmaker is taking market share from Intel Corp. amid strong demand for personal computers and servers.

Second-quarter revenue will be about $3.6 billion, plus or minus $100 million, in the period ending in June, Santa Clara, California-based AMD said Tuesday in a statement. That compares with an average analyst estimate of $3.28 billion.

Investors have poured money into the stock, betting that new products and stumbles by Intel would result in a permanent upgrade to AMD’s also-ran status. Intel reported data center revenue that dropped 20% in the first-quarter, leading many analysts to project that it was losing sales to its smaller rival in the most profitable part of the market for computer processors.

Three months ago, AMD Chief Executive Officer Lisa Su forecast that the company’s revenue would grow 37% this year. Tuesday AMD lifted that prediction to a 50% gain in 2021. The bullish outlook has prompted questions about whether AMD can get enough chips to meet demand amid industry-wide shortages at the company’s outsourced manufacturer, Taiwan Semiconductor Manufacturing Co.

AMD competes with Intel in processors for personal computers and servers and has struggled to get more than 20% market share for much of the 50 years they’ve been competing. It also supplies graphics chips used in Microsoft Corp.’s Xbox and Sony Corp.’s PlayStation and competes with Nvidia Corp. in PC GPUs.

Last week, Intel’s report caused a slump in its shares. Executives pinned the large decline in Intel’s data center business on a slowdown in orders by companies such as Alphabet Inc.’s Google and Inc.’s AWS that are working through stockpiles of chips before ordering more, they said.

AMD reported first-quarter net income of $555 million, or 45 cents a share, compared with $162 million, or 14 cents, in the same period a year earlier. Revenue rose 93% to $3.45 billion. Profit, excluding certain items, was 52 cents. Analysts were looking for profit of 44 cents on sales of $3.21 billion.

AMD shares rose about 3% in extended trading after closing at $85.21. The stock has slipped 7% this year, paring a surge over the last five years. It ended 2015 at $2.87.

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