Chipmaker AMD’s (NASDAQ:AMD) stock is climbing 6% in early trading and is one of the most popular stocks on social media. Yesterday after the market closed, the tech giant reported third-quarter results that came in slightly below analysts’ average estimates, but the Street appears to be encouraged by the performance of its data center business.
AMD’s Results and Guidance
The company’s revenue climbed 29% year-over-year to $5.6 billion, roughly in line with analysts’ average estimate. Its earnings per share, excluding certain items, came in at 67 cents, versus the mean estimate of 70 cents.
AMD CEO Lisa Su reported that AMD’s Q3 results were below its own expectations because of weak “PC demand.” However, she noted that the firm’s “Data Center, Gaming and Embedded segments, each delivered significant year-over-year growth and performed in line with our expectations.” Moreover, the CEO reported that AMD had achieved ” significant momentum in our Data Center business.”
Specifically, AMD’s data center revenue climbed 45% YOY last quarter, while its “cloud revenue more than doubled” YOY, Su noted.
The revenue of the company’s Embedded unit jumped to $1.3 billion, versus just $79 million during the same period a year earlier, while its Gaming sales climbed 14% YOY to $1.63 billion.
For the current quarter, AMD predicts that its overall sales will climb 14% YOY to about $5.5 billion, “plus or minus $300 million.” Analysts’ mean outlook was $5.94 billion.
AMD Stock and Analysts’ Reactions
Calling AMD’s data center business “decent” and “quite a bit better than” that of Intel (NASDAQ:INTC), Stacy Rasgon, a veteran analyst at research firm Bernstein, told CNBC that AMD’s data center metrics had reassured Wall Street.
Meanwhile, investment bank Stifel kept a “buy” rating on AMD stock. The firm believes that the company’s Client business, which is dominated by its products for PCs, has started to bottom. Moreover, Stifel anticipates that “market share gains in higher value platforms” will push its margins higher.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.