After the release of better-than expected Q2 results and a positive outlook for margins, shares in Advanced Micro Devices (NASDAQ 🙂 were up almost 6% Wednesday morning.

The chipmaker reported an adjusted earnings per share of $1.13 for Q1. This is up from 52c the previous year and analysts’ estimates of 92c. The revenue came in at $5.89Billion, an increase of 71% and more than the $5.3B expected.

The company anticipates that revenue will be in the $6.3 billion-$6.7 billion range, exceeding analyst expectations of $6.03 trillion. The adjusted gross margin should be around 54%. Analysts had expected 52.9%.

AMD forecasts that revenue will reach $26.3 Billion for the whole year. That’s up from $21.5 billion in its prior forecast and is higher than the consensus estimate of $24.08B. The FY adjusted gross margin for AMD is 54%, which compares to 51% in its prior guidance and analysts’ expectations of 53.2%.

“Demand remains strong for our leadership products, with our increased full-year guidance reflecting higher AMD organic growth and the addition of the growing Xilinx business,” AMD said in a statement.

“Each of our businesses grew by a significant double digit percentage year-over-year, led by EPYC server processor revenue more than doubling for the third straight quarter.”

Here’s what Street analysts had to say about AMD’s Q1 performance and guidance.

BMO’s Ambrish Srivastava (Market Perform, $100): “AMD raised its top-line guidance for 2022 to a mid-30% growth vs. the 31% (core) previously. AMD’s server share gains are helping despite PC weakness. AMD’s assumptions remain conservative and closer to how AMD believes the market will shape out. Xilinx is expected to grow 2x compared with what we previously predicted. Therefore, this year’s acquisition should be somewhat accretive. We are raising our estimates, but remain Market Perform rated on shares.”

Raymond James’ Chris Caso (Strong Buy, $160): “The report was consistent with our view outlined in our upgrade to Strong Buy last week, and our favorable initiation a year ago, and while they guided to upside for the full year, only low-single digit sequential growth is required in 2H to achieve the full year number, suggesting conservatism. Our revised 2023 EPS of $4.94 implies an 18x multiple, which no longer implies a multiple premium, which we think is highly attractive given AMD’s secular growth profile.”

UBS’ Timothy Arcuri (Neutral, $110 from $150): “We remain on the sidelines for two reasons: First, while the XLNX and Pensando acquisitions set AMD on a path to mirror NVDA/INTC’s multipronged approach to the data center, we still view data center GPU/accelerator efforts as being hampered by software (revenue declined Q/Q) and we don’t see XLNX as a near-term remedy. Second, we see Server CPU share gain as the biggest driver of the stock – AMD gained ~120 bps server CPU share in Q1 and we see a path to AMD exiting C2022 >15% share – but we believe AMD’s competitive landscape is getting more difficult.”

By Senad Karaahmetovic