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Yesterday, AMD (NYSE: AMD) announced its first quarter earnings that outpaced market expectations. The overall export issues with China will result in $700 million in lost revenue for the current quarter. 

AMD’s Financials 

For the first quarter, AMD’s revenues grew 36% to 7.44 billion, ahead of $7.13 billion expected by the market. Adjusted EPS came in at $0.96, which was also ahead of the $0.94 market estimate.

By segment, Data Center revenues grew 57% to $3.7 billion, Client and Gaming segment revenues climbed 28% to $2.9 billion and Embedded segment revenues were down 3% to $823 million.

For the fourth quarter, AMD expects revenue to be approximately $7.4 billion. Analysts expect AMD to end the year with revenues of $21.5 billion and an EPS of $2.60. AMD reported that it lost $700 million in revenue during the current quarter from export controls and expects a total of $1.5 billion in lost revenue through its fiscal third quarter due to these issues. The market was looking for revenues of $7.25 billion for the quarter.

ZT Systems’ Acquisition

Over the last few years, AMD has been growing through acquisitions. It recently announced that it had completed the acquisition of a boutique chipmaker ZT Systems for an estimated $4.9 billion. Secaucus-based ZT Systems was established 15 years ago and is among the leading suppliers of hyperscale server solutions for cloud computing and artificial intelligence. The company brings together expertise in design, integration, manufacturing, and deployment capabilities for AI compute and storage infrastructure at scale for some of the largest global cloud companies. The transaction will help AMD make progress into its AI strategy to deliver leadership AI training and inferencing solutions. It will offer ZT Systems’ capabilities to its cloud and enterprise customers to accelerate the deployment of AMD-powered AI infrastructure at scale. By integrating AMD’s Instinct AI accelerator, and networking product portfolios with ZT Systems’ data center systems expertise, AMD will be able to deliver end-to-end data center AI infrastructure at scale. Prior to the acquisition, ZT Systems had 2,500 employees and was generating $10 billion in annual revenue. AMD is looking to challenge Nvidia’s dominance in the GPU market which currently boasts of an 88% share compared with AMD’s 12%.

Its stock is currently trading at 52-week high levels of $100.59 with a market capitalization of $160.2 billion. It was trading at $187.28 in July last year and has recovered from the 52-week low of $76.48 a few weeks ago.

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