Advanced Micro Devices (AMD 2.01%) went into its second-quarter earnings report facing multiple headwinds in the form of a big slowdown in sales of personal computers (PCs) and softness in graphics card prices, but its numbers turned out to be better than expected.

AMD reported eye-popping growth when it released its results on Aug. 2, easing past consensus estimates thanks to the terrific demand for its chips that are used in data centers, computers, and gaming consoles, among others. Though the outlook was lighter than what Wall Street was looking for, AMD is on track to deliver outstanding growth in 2022. More importantly, it could sustain its hot growth for a long time to come, thanks to a bunch of impressive catalysts.

Let's see how AMD performed last quarter and why the stock remains an enticing bet right now.

AMD's market share gains are driving impressive growth

AMD's second-quarter revenue jumped 70% year over year to a record $6.6 billion as sales grew across all its business segments. The acquisition of Xilinx, which was completed in February this year, also contributed to this solid growth. More specifically, the Xilinx acquisition added $1.3 billion to AMD's embedded segment revenue, an increase of 2,228% over the prior year.

What's more, AMD's non-GAAP (adjusted) gross margin surged 640 basis points year over year, while the adjusted operating margin also increased by a similar margin to 30%. The fatter margins and the healthy top-line spike helped AMD increase its earnings by 67% to $1.05 per share last quarter. Analysts would have been content with earnings of $1.03 per share and revenue of $6.53 billion.

The stronger-than-expected performance from AMD isn't surprising as it was well placed to beat the weakness in the PC market. The chipmaker has been pursuing the premium end of the PC processor market, and that seems to have worked in its favor last quarter. Its client segment revenue, which includes sales of desktop and notebook processors and chips, increased 25% year over year to $2.2 billion.

AMD witnessed a one-percentage-point increase in its operating margin in this segment thanks to the rise in the average selling price (ASP) of its processors. AMD CEO Lisa Su pointed out on the latest earnings conference call that it gained market share in client processors yet again. The company has increased its share in PC processors for nine straight quarters at the expense of Intel (INTC 1.16%).

AMD reportedly controlled 36% of the PC processor market in the second quarter, with Intel holding the rest. It is worth noting that Intel's revenue from its client computing segment, which includes sales of desktop and notebook processors, was down a whopping 25% year over year in the second quarter to $7.66 billion. This makes it clear that AMD is enjoying a mix of stronger volumes and pricing power in the PC processor space. More importantly, it has room to gain more share with the launch of new chips on the horizon.

The data center business, however, was the star of the show as it reported an 83% year-over-year spike in revenue to $1.5 billion. The segment's operating margin also improved to 32% last quarter from 25% in the year-ago period. Su said on the earnings call that the demand for AMD's server processors increased substantially over the prior-year period thanks to robust demand from both cloud and enterprise customers.

Su added, "In [the] cloud, more than 60 new instances powered by third-gen EPYC processors launched in the quarter from AWS, Baidu, [Alphabet's] Google, Microsoft Azure, and Oracle, including the industry's first cloud-based software-as-a-service solution for chip design for Microsoft Azure and Synopsys, powered by our Milan-X processors with 3D stacked triplets."

AMD controlled 11.6% of the server CPU market in the first quarter of 2022, and the company believes that it is set for more share gains in this segment with the launch of its upcoming processors. A closer look suggests that AMD is sitting on a massive opportunity in server processors that could supercharge the company's growth in the long run.

What about the outlook?

AMD's guidance for the current quarter fell short of consensus estimates. The company expects $6.7 billion in revenue this quarter, while analysts were looking for $6.84 billion. However, investors shouldn't forget that AMD's revenue would increase 55% year over year as per its guidance.

Also, the company's non-GAAP gross margin forecast of 54% for the current quarter points toward a nice improvement over the prior-year period's figure of 48%. Even better, AMD expects 60% revenue growth for the full year to $26.3 billion, which is higher than Wall Street's forecast of $26.2 billion.

Analysts are also upbeat about the company's long-term prospects, estimating 28% annual earnings growth for the next five years. That's not surprising, as AMD has a lot of room to gain more share against Intel in the server and PC markets.

Additionally, the company has an additional catalyst in the form of the video gaming market, where its semi-custom chips are used by major console manufacturers. All this indicates that AMD is a top growth stock to buy right now. The stock is trading at 43 times earnings, which represents a discount from its five-year average of 102.

Share prices of AMD have soared 36% in the past month. So, investors can buy AMD at a relatively attractive valuation right now before it jumps higher and becomes more expensive.