The 2024 Q3 earnings season continues at a rapid pace, with a nice variety of companies delivering quarterly results daily.

So far, several popular stocks, namely Advanced Micro Devices AMD and Eli Lilly LLY – have reported quarterly results, with the two seeing negative post-earnings reactions.

But did the results warrant the knee-jerk reaction? Let’s take a closer look at each release.

AMD Reports Record Data Center Results

 

Concerning headline figures in the release, AMD posted a 1.1% beat relative to the Zacks Consensus EPS estimate and reported sales 1.5% ahead of expectations, reflecting growth rates of 31% and 17%, respectively.

Margin expansion helped lead to higher profits, with its gross margin of 54% comparing favorably to the 47% mark in the year-ago period. Margin expansion has been present for several periods, providing notable tailwinds.

Below is a chart illustrating the company’s margins on a trailing twelve-month basis.

Image Source: Zacks Investment Research

Notably, the company is now on track to deliver record annual revenue for 2024 thanks to significant growth among its Data Center and Client segments. In fact, Data Center revenue of $3.5 billion reflected a quarterly record, up an astonishing 122% on a year-over-year stack. The ramp-up of AMD Instinct GPU shipments and growth in AMD EPYC CPU sales drove the record results.

Lisa Su, CEO, said:

“Looking forward, we see significant growth opportunities across our data center, client and embedded businesses driven by the insatiable demand for more compute.”

Despite the record results, the stock didn’t see a great reaction following the print, with shares down nearly 5% in 2024 overall. The valuation picture here isn’t rich, though, with the current 1.1X PEG ratio comparing favorably to a 1.2X five-year median and 6.5X five-year highs.

Image Source: Zacks Investment Research

The company’s earnings outlook has taken a hit across the board following the release, undoubtedly a key development worth tracking.

Image Source: Zacks Investment Research

Eli Lilly Trims Outlook

 

Eli Lilly fell short of both our consensus EPS and sales expectations, reflecting misses of 22% and 5%, respectively. Sales grew a strong 20% year-over-year, whereas EPS of $1.18 per share was up more than 1000% due to easy comps.

15% higher volumes and 6% higher realized prices helped lead the strong sales growth, with flagship offerings such as Mounjaro and Zepbound contributing significantly. Below is a chart illustrating the company’s sales on a quarterly basis.

Image Source: Zacks Investment Research