Advanced Micro (AMD) Q1 Earnings: Is a Beat in the Cards?


Advanced Micro Devices, Inc. AMD is scheduled to report first-quarter 2018 earnings on Apr 25.

Notably, the stock has delivered an average four-quarter positive earnings surprise of 35%. In the last reported quarter, the company came up with a positive earnings surprise of 60%.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 8 cents per share, indicating a 300% increase on a year-over-year basis. Revenues are estimated to be around $1.55 billion, indicating a 57.6% increase from the year-ago quarter.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Advanced Micro has a Zacks Rank #3 and an Earnings ESP of +1.19%. This indicates that the company is likely to beat estimates. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

What's Driving the Better-Than-Expected Earnings?

Increasing adoption of artificial intelligence (AI) techniques and machine learning tools in industries like gaming, automotive and blockchain are primarily responsible for driving GPU demand.

The company continues to benefit from the robust performance of its product portfolio, comprising Ryzen CPU, EPYC and Radeon Vega GPUs.

Notably, AMD reports GPU sales under Computing and Graphics segment, which recorded revenues of $890 million in the fourth-quarter of 2017, up 74% from the year-ago quarter. Moreover, improving mix of higher margin GPUs also drove gross margin. AMD is expected to keep on gaining from this growing demand.

Additionally, the company's collaborations with Baidu BIDU, Amazon AMZN, Tencent, Microsoft and are further tailwinds for the company.

However, some reports suggest a decline in cryptocurrency mining demand, which could negatively impact the GPU market. Per Moore, sluggish cryptocurrency demand is likely to affect AMD's business.

Advanced Micro Devices, Inc. Price and EPS Surprise

Advanced Micro Devices, Inc. Price and EPS Surprise | Advanced Micro Devices, Inc. Quote

Another Stock to Consider

Here is another stock, which you may consider as our model shows that it has the right combination of elements to post an earnings beat in its upcoming release:

Paycom Software, Inc. PAYC has an Earnings ESP of +0.33% and sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

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