Advanced Micro Devices (AMD) CEO Lisa Su believes the chip designer’s blockbuster acquisition of Xilinx has been on track since closing in February, with more benefits on the horizon. The purchase of Xilinx helped AMD further diversify its business away from personal computers, significantly strengthening the company’s ability to support energy industries such as aerospace, automotive and telecommunications. This, in addition to AMD’s multi-year foray into the data center, is a key reason why we are bullish on the company’s long-term prospects despite our currently more cautious view of chip stocks. “Things have been going very well. Our acquisition thesis has played out exactly how we hoped it would,” Su said in a CNBC interview on Wednesday, a day after the club holding company reported third-quarter results amid a tough macro environment for semiconductor companies. The results were slightly weaker than analysts had expected, although AMD announced disappointing preliminary numbers in early October. Third-quarter revenue, while falling short of estimates, rose 29% to $5.57 billion. AMD expects fourth-quarter revenue of about $5.5 billion to be about flat sequentially. The only two segments AMD sees sequential revenue growth in the fourth quarter are data centers and what it calls “embedded,” where Xilnix’s revenue sits in the aforementioned verticals and others like defense. In contrast, management expects AMD’s traditional end markets — PCs and gaming, mostly on the graphics side — to continue to weaken in the fourth quarter versus the third quarter. This shows how the company’s diversification strategy can work in cyclical downturns, which the semiconductor industry is known to experience from time to time. Its newer focuses — data center and embedded — are holding up for now, while there are weaknesses in parts of the company’s consumer-facing end markets. While it’s not clear when these tough times in the chip sector will end, Su told Jim Cramer that the AMD-Xilinx pairing has the potential to get even better thanks to intellectual property synergies. After all, it hasn’t been a year since the companies shared a common roof. “With the Xilinx portfolio, we’ve actually been able to help accelerate growth in this space [embedded] business if you look at the supply chain and the overall demand for those products. It worked very well,” said Su. “I’m even more excited about what we’ll see in the future as we integrate some of our products along with the AMD processor IP with some of the Xilinx AI and other acceleration IPs. So far, AMD’s data center business has proved “relatively resilient” in the face of economic headwinds, Su said, growing 45% year over year to $1.6 billion in the third quarter. dollars grown. In the second quarter, data center revenue was $1.5 billion, up 83% from 2021. As previously mentioned, AMD expects current fourth-quarter data center revenue to exceed the $1.6 billion it generated in the three months ended Sept. 24. AMD is set to unveil its latest data center chip called Genoa next week, which falls under the company’s Epyc brand of server processors. This is a notable development in the company’s market share battle with Intel (INTC) as AMD, under Su’s leadership, has attempted to do be consistent in bringing product innovations to market. Intel’s next-generation data center chip, called Sapphire Rapids, has experienced delays and is now set to launch next year. In recent years, AMD has taken advantage of Intel’s missteps. AMD has begun shipping shipments of Genoa chips to “select customers,” Su said on Tuesday night’s conference call. Production will ramp up in the fourth quarter. “I find [Genoa] continues to give us strength in cloud data centers as well as enterprise,” Su told CNBC on Wednesday After China, while hurting semiconductor companies like Nvidia (NVDA), AMD reiterated its trail earnings Tuesday night’s earnings call that these rule changes will not be material to its business, AMD said the same thing when the government’s export measures were first announced in late August (Jim Cramer’s Charitable Trust has long been AMD See here for a full list of stocks) trust portfolio. If Jim spoke about a stock on CNBC television, he will wait 72 hours after the trade alert is issued before executing the trade. THE ABOVE INVESTMENT CLUB -INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY TOGETHER WITH UN SEREM DISCLAIMER. NO OBLIGATION OR OBLIGATION SHALL BE OR CREATED BY YOUR RECEIVING OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC RESULT OR PROFIT IS GUARANTEED.
Lisa Su, President and CEO of AMD
David A Grogan | CNBC
Advanced Micro Devices (AMD) CEO Lisa Su believes the chip designer’s blockbuster acquisition of Xilinx has been on track since closing in February, with more benefits on the horizon.