AMD rakes in the cash in its latest earnings report

AMD has reported its fourth quarter and full year earnings. If you’re an investor, the numbers make for happy reading thanks to AMD’s best ever revenues. It continues to enjoy growth across all of its divisions.

The company reported a record $4.8 billion fourth quarter revenue, up 49 percent from the same quarter in 2020. Non GAAP net income rose from $636 million in Q4 2020 to $1.12 billion in Q4 2021, a 77 percent increase!

For PC gamers, the most relevant results are those from AMD’s Computing and Graphics division. Here, AMD reported a revenue of $2.6 billion which is a 32 percent increase year on year and an 8 percent increase quarter on quarter. For all the talk of how difficult things are for chip makers, the huge asking prices of GPUs are obviously helping to fatten up the coffers at AMD. Q4 2021 operating income was $566 million compared to $513 million in Q3 2021 and $420 million in Q4 2020.

AMD’s Enterprise, Embedded and Semi-Custom division generated $2.2 billion in revenue for the quarter. That’s a stunning 75 percent year-over-year increase thanks to strong EPYC sales and relentless demand for PlayStation and Xbox chips. Not unexpectedly, AMD expects console demand to continue for the foreseeable future.

It's important to note that these results mostly exclude the late 2021 market altering release of Intel’s 12th Generation CPU range. It will be interesting to see AMD’s Q1 2022 results given the strength of Intel’s non-K CPU lineup. There’s also the looming release of Intel’s Arc Alchemist GPU range which will naturally take away some of AMD’s (and Nvidia’s) GPU revenues, though that will only become apparent later in 2022. Zen 4 and RDNA3 GPUs are still many months away from release which may also slow momentum on the Computing and Graphics side. 

There's a lot of short term growth potential on the Enterprise, Embedded and Semi-Custom side though. Apart from ongoing console demand, AMD’s very competitive enterprise products continue to chip away at Intel’s market share.

AMD continues to sell just about every GPU it can make. Sky-high prices are no doubt big contributors to AMD’s report of a gross margin of 50 percent. That's great for shareholders, but does little for disillusioned gamers looking for a GPU bargain. We can never get used to the idea of spending $300 on a card like the Radeon RX 6500 XT, an ostensibly entry level GPU.

While AMD's production costs may be higher like those of most semiconductor companies, it's hardly damaging the bottom line. We can only hope that average selling prices will fall as supply chain woes ease. It's early days, but there are signs that things are improving.

A couple of weeks ago, Intel CEO Pat Gelsinger said that AMD was in the rear-view mirror. With results like these and strong ongoing demand for GPUs, console chips and enterprise products, it might be premature to write off AMD just yet. Dr Lisa Su is probably getting a nice bonus this year.