AMD ‘in better shape’ than counterparts: Semiconductor analyst

AMD (AMD) rose more than 6% after beating estimates in Tuesday’s Q4 earning’s report, with investors rejoicing over the company’s highest recorded revenues ever.

“AMD has been extremely proactive in both working with and financing a lot of their supply chain partners here,” said Christopher Rolland, Susquehanna International Group senior equity analyst for semiconductors, in a recent interview with Yahoo Finance Live. So they are in better shape than many of their counterparts. We do think they are ultimately going to be successful in that quest.”

AMD’s revenue of $4.8 billion was up 49% year-over-year and 12% quarter-over-quarter. The multinational semiconductor producer was energized by strong demand for PS5 and Xbox Series X throughout the entirety of 2021.

Other notable bright spots on the company’s earnings report included gross margin, which was up 5% year-over-year to 50%, and operating income, which was $1.2 billion compared to $570 million a year ago and $948 million in the prior quarter.

California-based tech giant Intel (INTC) has long been one of AMD’s premier rivals. Back in January, Intel CEO Pat Gelsinger made headlines after posting a video in which he asserted that the company had beaten its rival for good. “All of a sudden…Boom! We are back in the game,” Gelsinger said. “AMD in the rearview mirror [for] clients, and never again will they be in the windshield; we are just leading the market.”

Though AMD has had a leg up on its competition for the past couple years, Intel has recently made a concerted effort to catch up.

“Normally, it’s Intel that’s seen as the main competitor [to AMD],” Morningstar Technology equity strategist Abhinav Davuluri told Yahoo Finance Live. “[Intel has] obviously had a lot of manufacturing issues. And those are expected to continue at least for the foreseeable future.”

Even so, promising new leadership and the release of several new computer processing products could make for a more competitive 2022, Davuluri noted.

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“Pat Gelsinger has a pretty interesting plan put in place, IDM 2.0, to kind of get their internal manufacturing back on track,” he said. “So it could be interesting to see how that battle kind of wages. Both firms have some impressive products in the pipeline coming out later this year that I think will definitely create a pretty intense pricing environment. So that could be some pressure that AMD faces later in this year.”

XLNX acquisition could be mutually beneficial

Last month, AMD’s acquisition of the technology design company Xilinx (XLNX) was approved by Chinese regulatory authorities, allowing the merger to move closer towards completion. Xilinx specializes in the design and production of various different programmable devices, including programmable logic devices.

“We think it’s an excellent acquisition by AMD, particularly because this COVID supply chain kind of nightmare has hit Xilinx particularly hard,” Rolland said. “We track lead times very closely. And lead times for Xilinx products are in the 70- or 80-week range. They’ve just ballooned during COVID. And we think AMD with some of the investments that we just talked about in the supply chain and their supply chain partners, we think that they will be able to get a better handle on these lead times and ultimately ship more product.”

Xilinx has improved earnings as of late, posting a record-high revenue of $936 million, representing 7% sequential growth and 22% annual growth during the company’s fiscal second quarter 2022.