Can Advanced Micro (AMD) Pull An Earnings Surprise In Q2?

 | Jul 21, 2017 02:43AM ET

Advanced Micro Devices Inc. (NASDAQ:AMD) is set to report second-quarter 2017 results on Jul 25. Notably, the company has a mixed record of earnings surprises in the trailing four quarters, with an average positive surprise of 34.09%.

In the last quarter, the company reported a loss of 7 cents per share, which was in line with the Zacks Consensus Estimate. Revenues increased 18.3% year over year to $984 million primarily driven by higher Graphics Processor Unit (GPU) sales. Additionally, revenues beat the Zacks Consensus Estimate of $983 million.

AMD expects second-quarter 2017 revenues to increase 17% sequentially (+/- 3%). At mid-point this reflects 12% growth on a year-over-year basis. Further, gross margin is likely to be 33%, while non-GAAP operating expenses are estimated to be $370 million.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

We note that the stock is up 21.7% on a year-to-date basis, which reflects bullish expectations from AMD’s expanding product portfolio (Ryzen Pro, Vega accelerator, EPYC server processor, Ryzen desktop processor). The company has also benefited from strong demand of its GPU cards, which are now increasingly used to mine cryptocurrencies like Bitcoin and Ethereum.

Advanced Micro Devices, Inc. Price and EPS Surprise

Advanced Micro Devices, Inc. Quote

However, over the same time frame, the stock has underperformed the 30.8% rally of the industry it belongs to. The underperformance reflects stiff competition from NVIDIA (NASDAQ:NVDA) in the GPU space and Intel (NASDAQ:INTC) in the consumer PC market.