AMD raises full-year sales forecast on data center strength

(Reuters) – Advanced Micro Devices Inc raised its full-year revenue outlook on Tuesday, driven by a surge in chip demand from data-center operators and PC makers scrambling to meet coronavirus-induced remote work needs.

Shares of the chipmaker jumped 9% in extended trading after it also forecast current-quarter sales above Wall Street targets. The stock has gained about 50% this year through Tuesday’s close as investors cheered its success in next-generation chips, at a time when rival Intel Corp faces delays in building 7-nanometer semiconductor technology.

AMD, which relies on outside foundries to make its chips, has started to take market share from Intel with offerings made on Taiwan Semiconductor Manufacturing Co Ltd’s <2330.TW> 7-nm process technology.

Last year, AMD announced a 7nm “Rome” chip for servers in data centers and disclosed it had landed Google and Twitter Inc as customers.

Intel, by contrast, is expected to release its “Ice Lake” 10nm chip for servers later this year. Analysts view Intel’s 10nm technology as comparable to TSMC’s 7nm generation, despite the differing naming conventions.

Like Samsung Electronics Co Ltd <005930.KS> and Texas Instruments Inc , AMD has also benefited from a surge in demand from businesses investing to fortify their IT infrastructure to help employees work virtually.

Revenue from AMD’s computing and graphics segment, which includes graphic chip sales to data centers, rose 45% to $1.37 billion, beating analysts’ estimate of $1.36 billion, according to research firm FactSet.

Sales in the enterprise, embedded and semi-custom segment, which also houses chips used in consoles, fell 4% to $565 million, still beating FactSet estimates of $485 million.

AMD now expects 2020 revenue to grow by about 32%, driven by strength in PC, gaming and data center products.

It expects third-quarter revenue at about $2.55 billion, plus or minus $100 million, compared to analysts’ average estimate of $2.32 billion, according to IBES data from Refinitiv.

(Reporting by Munsif Vengattil in Bengaluru and Stephen Nellis in San Francisco; Editing by Sriraj Kalluvila, Shailesh Kuber and Maju Samuel)