This Semiconductor Company Just Posted Record Quarterly Revenue

With quarterly revenue up 49% year over year, Advanced Micro Devices (AMD -2.19%) also reported record full-year revenue of about $16.4 billion. In this segment from "Semiconductor Revolution," recorded on Feb. 3, Motley Fool contributor Jose Najarro discusses AMD's outstanding results and what investors should expect in the short and long term. 

Jose Najarro: We're going to start off with Advanced Micro Devices, AMD. This is a super popular, I want to say to investors right now. We can see record quarterly revenue, $4.8 billion, and that's up 49 percent year-over-year for quarterly revenue, they also did do a record full-year revenue of about 16.4 billion for the full year, and that was up about 68 percent. Some other highlights, cash and cash equivalents, they ended the quarter with $3.6 billion in cash. Pretty much very little in debt. They have a little bit less than $350 million in debt. That might change a little bit once they get that Xilinx acquisition. Xilinx might come with a little bit of debt in their balance sheet. But after looking at it, I think we looked at it with Nick. It's not a drastic amount of debt that will be coming in. They also did a strong amount of repurchase. They repurchased about $1.8 billion of common stock during this full-year.

One thing that I thought was super impressive was that cash from operations this year was $3.5 billion compared to same time last year which was $1.1 billion. They increased their revenue by almost 70 percent for the year, but they increased their cash flow from operations by over 200 percent. That was pretty impressive. Another thing I wanted to mention is here if we take a quick look at our segment results, there's two main segments for AMD. First there's the computing and graphics. Here's where you have your graphics card and your Rizen processors, the processes that go into laptops, that go on your desktops as well. Then they have the enterprise and Embedded Semi-Custom. Here are the special chips. The special chips are the ones that go on data centers, for example, and also the chips that go on the new gaming consoles. We can see right now, this most recent quarter net revenue from the semi-custom chips were about $2.2 billion. That's only about $300 million less than computing and graphics. They're seeing strong growth there.

During the earnings call, Lisa Su, the CEO of AMD, mentioned that their datacenter revenue increased 100 percent year-over-year. That's a mixture of both their server processors and their graphics cards for data centers. The reason that's super important is even though that segment provides less revenue, it's the segment that provides the most operating income. Usually special types of chips have higher margins. For them to continue to see that strength in the overall data center market, I do believe we will continue to be bullish for their operating income.

Some highlights that we saw during the earnings call and something we talked about earlier on, I think last week, that AMD got the approval from regulators in China that there are OK to finish off this Xilinx acquisition. They mentioned a little bit during the earnings call that they're still intact in schedule to finish this acquisition by the end of quarter one of 2022. Now we're already in February. It seems like within the next two months or so at the latest, we should be able to hear about this acquisition. One thing that I personally been interested in is how are they going to integrate these two technologies? How are they going to interest rate these two companies? Because like we mentioned, we talked with Nick before how these are two giant companies, obviously AMD is a little bit bigger than Xilinx, but Xilinx is still a big player and unfortunately, they said during the earnings call they couldn't go much in detail. They did mention that they have worked really hard with both teams to make sure that they're working on strong integrations. Once the acquisition is complete, they're excited to show investors a roadmap of new products that they're going to be building with this dual of a team. I think that was pretty cool.

Like I mentioned, they continue to see huge momentum in the datacenter market. The datacenter market now makes up 20 percent of total revenue for AMD. Like I mentioned, that's the market that provides strong margins. Some other things, they are working on their next-generation of chips. That's going to be called the Zen 4. It's going to be based on the Zen 4 architecture. That's actually going to be the five-nanometer chip based on TSMs production there. That's expected to be available in the second half of 2022.

I do believe this is a great thing and a scary thing about, I want to say the semiconductor industry, is this is has to be a very innovative market. If there's any form of slowdown ever, there's going to be competition that just comes out of nowhere and tries to steal your thunder. AMD has done it really well with Intel, Intel at first slowed down a little bit and AMD was able to go full gas on the car and has now accelerated there. But AMD knows firsthand experience that if they slowed down with any type of roadmaps, with any type of innovations, it could be scary for the future of the company. We can see the continue to innovate new products.

Just a few things, just overall price change in the past year. We can see it's been all over. Obviously something pretty quiet could just be the S&P 500. There are times when it tracks it and there's times when they just destroys performance. I just want to share my final thoughts. I personally thought earnings were great. I am as an investor and there's nothing that I would worry about in the short-term as an investor. But at the same time, I understand that there could be a lot of short-term negativity, and I think that's important, if anything like supply chain issues arise can really affect AMD's stock price. If we continue to see if there's any slip up anywhere in defects of maybe some of the chips that are being produced at TSM, I'm not saying that's going to happen. But I understand if it does happen, it could cause some form of short-term negativity in the stock.