Semiconductor company Advanced Micro Devices (NASDAQ:AMD) stock has been squeezing to new all-time highs running on all cylinders. The fabless maker of CPU and GPU chips has been both a pandemic and post-market winner gaining from greater PC and mobile device engagement, streaming, gaming, and the surge in cryptocurrencies.
Despite global chip shortage and supply chain concerns, the company had a stellar Q3 2021 with top-line beating estimates by over $200 million. The company also raised both top and bottom-line estimates for Q4 2021. Shares are been on a tear as it reaches for the $200s. Prudent investors should avoid chasing and watch for opportunistic pullbacks levels to gain exposure.
Q3 FY 2021 Earnings Release
On Oct 26, 2021, AMD released its fiscal third-quarter 2021 results for the quarter ending September 2021. The company reported an earnings-per-share (EPS) profit of $0.73 excluding non-recurring items versus consensus analyst estimates for a profit of $0.66, a $0.07 beat. Revenues grew 54% year-over-year (YoY) to $4.31 billion beating analyst estimates for $4.11 billion.
Revenue growth was driven by a “richer mix” of EPYC, Ryzen, and Radeon chip sales. The company generated $764 million in free cash flow, up from $265 million in the year-ago same period. AMD CEO Lisa Su said,
“AMD had another record quarter as revenue grew 54% and operating income doubled year-over-year. 3rd Gen EPYC processor shipments ramped significantly in the quarter as our data center sales more than doubled year-over-year. Our business significantly accelerated in 2021, growing faster than the market based on our leadership products and consistent execution.”
Upside Guidance
The company raised Q4 2021 revenue guidance to come in the range of $4.40 billion to $4.60 billion versus $4.25 billion consensus analyst estimates with gross margins expected around 49.5%.
Conference Call Takeaways
CEO Su set the tone,
“In client computing, sales grew by a strong double-digit percentage year-over-year and declined slightly sequentially. Ryzen 5,000 processor shipments increased by a double-digit percentage sequentially, resulting in a richer product mix as we believe we gained revenue share for the 6th straight quarter. On desktops, we launched our Ryzen 5,000 processors with integrated Radeon graphics for the channel to strong demand as third-party reviews highlighted the leadership computing and graphics capabilities and energy efficiency of these processors.
In notebooks, Acer, Asus, HP and Lenovo, all expanded their mobile offerings powered by Ryzen 5,000 mobile processors, as we continue gaining momentum in the premium consumer, gaming, and commercial markets. Commercial client growth year-over-year was based on new deployments across the public sector and Fortune 1,000 technology, energy, and automotive customers as the number of AMD-based commercial notebook designs available from the largest OEMs increased significantly year-over-year. We're also seeing strong growth in the workstation market.”
She continued,
“Frontier was architected specifically to deliver breakthrough HPC and AI compute performance and provide a blueprint for how supercomputing, enterprise, and cloud customers can enable exascale-level performance over the coming years by combining AMD CPUs, GPUs, and software. We are very pleased with the performance of our AMD's CDNA 2 GPUs and look forward to providing more details on their leadership performance next month. Turning to our enterprise embedded in the semi-custom segment, revenue increased 69% year-over-year to $1.9 billion, driven by strong growth in EPYC processor and Semi-Custom sales.
Semi-custom revenue grew sequentially and year-over-year as demand for the latest Microsoft and Sony consoles remains very strong. We expect semi-custom revenue to increase sequentially in the fourth quarter as we further ramp supply to address the ongoing game console demand. Turning to server, we delivered our sixth straight quarter of record server processor revenue, as sales more than doubled year-over-year and grew by a significant double-digit percentage sequentially.
Third-gen EPYC processors continue ramping faster than the prior generation and contributed the majority of our server CPU revenue in the quarter. In Cloud, multiple hyper scalers expanded their third-gen EPYC processor deployments to power their internal workloads. Both Microsoft Azure and Google announced multiple new AMD-powered instances. Cloudflare, Vimeo, and Netflix also all recently announced new deployments powered by EPYC processors, with Netflix highlighting how they doubled their streaming throughput per server, while also reducing their TCO.”
CEO Su concluded,
“We continue growing faster than the market, driven by our consistent execution and the investments we have made to build leadership products. Our supply chain team has executed extremely well in a challenging environment, delivering incremental supply throughout the year, supporting our strong revenue growth. We are also investing significantly to secure additional capacity to support our long-term growth. Our product portfolio and roadmaps have never been stronger, and I look forward to sharing more details about our next-generation servers, CPUs, and GPUs at our Accelerated Data Center Premiere on Nov. 8."
AMD Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames provides a precision view of the price action playing field for AMD stock. The weekly rifle chart has been in a strong uptrend on the pup breakout with a rising 5-period moving average (MA) at $135.98. The initial peak appears to have formed near the $158.32 Fibonacci (fib) level.
The weekly stochastic squeezed up through the 80-band stochastic on a mini pup as it nears the 90-band. The weekly upper Bollinger Bands were tested at $156.47. The daily rifle chart is steadily trending up with a rising 5-period MA at $152.19 with 15-period MA rising at $143.40. The daily market structure low (MSL) buy triggered above $125.67 as the pup breakout formed.
Shares formed a daily market structure high (MSH) trigger below $138.52. The daily stochastic formed a mini pup through the 80-band towards the daily upper BBs at $170.80. Prudent investors can watch for opportunistic pullback levels at $134.79 fib, $126.16 fib, $119.27 fib, $111.71 fib, $108.39 fib, $105.06 fib/daily lower BBs, and the $102.61 fib level. Upside trajectories range from the $174.54 fib to the $209.60 sticky 5s price level.