AMD inventory soars on Q1 earnings beat, better-than-expected outlook amid sturdy AI chip demand

AMD (AMD) reported its first quarter outcomes after the bell on Tuesday, beating analysts’ expectations on the highest and backside traces and topping Wall Avenue’s projections on second quarter income outlook.

The information despatched AMD inventory hovering, with shares closing up greater than 18% on Wednesday.

For the quarter, AMD noticed earnings per share (EPS) of $1.37 on income of $10.25 billion. Analysts have been calling for EPS of $1.28 and income of $9.89 billion, based on Bloomberg analyst consensus estimates.

The corporate noticed EPS of $0.96 and income of $7.43 billion in the identical quarter final yr.

Within the second quarter, AMD says it’s going to see between $10.9 billion and $11.5 billion in income. Wall Avenue had the quantity pegged at $10.52 billion.

AMD’s Q1 information middle income got here in at $5.8 billion, up 57% yr over yr and forward of expectations of $5.6 billion.

The corporate’s earnings come after Intel (INTC) reported its personal earnings on April 23, beating analysts’ expectations on the highest and backside traces and offering a better-than-anticipated outlook on the energy of its information middle enterprise. That despatched Intel inventory hovering 24%.

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CPUs have gotten more and more vital in information facilities as a result of explosion of curiosity in AI brokers, semi- or absolutely autonomous AI bots that may carry out duties on customers’ behalf.

When brokers take motion, they use instruments and software program that run on CPUs, driving an enormous improve in processor demand.

Like Intel, AMD sells its personal line of CPUs, however in contrast to its rival, it additionally affords high-powered GPUs for coaching and working AI fashions, giving it the prospect to draw a broader array of shoppers.

To that finish, AMD is making ready to launch its first rack-scale system referred to as Helios, which can mix the corporate’s GPUs and CPUs into a bigger server rack, just like Nvidia’s Vera Rubin-powered NVL72 rack system.

AMD’s Consumer section introduced in $2.9 billion versus expectations of $2.73 billion, whereas its gaming enterprise hit $720 million. Wall Avenue was projecting $668 million.

Based on the Worldwide Knowledge Company, international PC shipments are anticipated to fall 11.3% in 2026 as a result of ongoing international reminiscence scarcity. Pill shipments, in the meantime, may decline 7.6%.

Throughout Apple’s (AAPL) Q2 earnings name final week, CEO Tim Cook dinner famous that elevated reminiscence costs will doubtless hit that firm’s margins within the coming quarters.