In a tumultuous market, it's more important than ever to invest in great companies led by outstanding managers. One such example is Advanced Micro Devices (AMD 1.33%). If you had bought $10,000 worth of AMD shares when Lisa Su became chief executive officer in 2014, your investment would be worth more than $225,000 today.
So, is the recent pullback in AMD shares a chance to load up on the California-based chipmaker? Let's dive into the latest numbers for a closer look.
Image source: Getty Images.
Recent earnings show that AMD continues to thrive
AMD reported first-quarter earnings results on May 3, and they were spectacular. Earnings-per-share was $1.13, far exceeding analyst estimates of $0.91 a share. Meanwhile, revenues were $5.9 billion, beating estimates of $5.5 billion and growing 71% year over year.
| Segment | Revenue | Year-Over-Year Growth |
|---|---|---|
| Computing and Graphics | $2.8 billion | 33% |
| Enterprise, Embedded and Semi-Custom | $2.5 billion | 88% |
| Xilinx | $0.6 billion | 22% (pro forma basis) |
| Total | $5.9 billion | 71% |
Data source: AMD First Quarter 2022 Financial Results. Chart by author.
As noted above, AMD operates across three segments. The first segment, Computing and Graphics (C&G), focuses on the company's PC and computer gaming chips. But it's the second segment, which focuses on enterprise servers and cloud technology, that buttered AMD's bread this quarter.
The Enterprise segment reported 88% year-over-year revenue growth led by sales of AMD's EPYC microprocessors, which are the brainpower behind many data centers. Moreover, this same segment saw strong semi-custom sales to Microsoft and Sony due to high demand for those companies' gaming platforms (Xbox and Playstation).
AMD's final segment consists of its recent acquisition, Xilinx. Its deal with Xilinx closed on Feb. 14, so only six weeks of Xilinx revenues are officially included in this quarter for AMD. However, the Xilinx segment generated $1 billion of revenue on a pro forma basis (including the full quarter's revenues rather than removing the first six weeks).
While some investors think of AMD as a PC chipmaker, it's clear the company has more to offer. Specifically, the latter two segments (Enterprise and Xilinx) are its main growth and margin driver. Overall, AMD's gross profit margin was 48.5% in the first quarter, bringing its three-year gross profit margin average to a stout 44.5%.
AMD Gross Profit Margin (3y Median) data by YCharts.
Is now the time to buy AMD?
Despite AMD's excellent performance, the stock market has battered its share price. After reporting earnings, shares popped briefly before turning lower once again. AMD is nearing a five-year low of 30.7 in its price-to-earnings multiple at current prices.
When the broader market sells off, that is the time to buy great stocks at a discount -- AMD certainly fits that bill.
