Why Advanced Micro Devices Stock Popped Over 5% Higher Today
What happened
Shares of Advanced Micro Devices (NASDAQ: AMD) were up 5% this morning as of 11:25 a.m. ET, and were up as much as 11% earlier in the day. AMD reported its financial results for the final quarter of 2021, which turned out to be yet another epic year for the chip designer.
So what
AMD's revenue reached a new quarterly record in the fourth quarter: $4.8 billion, a 49% year-over-year increase (which compounds the 53% increase in Q4 of 2020). Full-year 2021 revenue ended up being 68% higher to $16.4 billion (compounding the 45% gain for full-year 2020).
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Adjusted earnings per share (EPS) grew at an even faster rate, growing 77% year over year in Q4 and up 117% for full-year 2021. Q4 adjusted EPS of $0.92 obliterated average Wall Street analyst expectations, which were pegged at a consensus of $0.76.
The jump in share price today puts AMD stock at a 38% return over the trailing-12-month period, handily beating the S&P 500's return of 21% over the same period.
Now what
AMD's CEO Lisa Su and the top team don't think the run is over yet. The midpoint of guidance for the first quarter of 2022 calls for $5 billion in sales, implying 45% year-over-year growth. And full-year 2022 sales are expected to be $21.5 billion, a 31% increase over the annual results just reported. Additionally, adjusted gross profit margin on product sold is expected to expand to 51%, up from 48% this past year -- indicating the bottom line could be in store for another big jump as companies in all sectors of the economy are in need of more high-end computing chips.
Once a small underdog playing a distant second fiddle to Intel, AMD's research and development has propelled it into one of the largest semiconductor designers out there. With revenue and profitability both still on the rise, be sure to keep this chip company on your radar for 2022 and beyond.
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Nicholas Rossolillo and his clients own Advanced Micro Devices. The Motley Fool owns and recommends Advanced Micro Devices and Intel. The Motley Fool recommends the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool has a disclosure policy.
