INTC Intel Corporation

Chip maker Advanced Micro Devices Inc. on Thursday swung to a quarterly profit and reported the first sales increase in nearly two years, projecting its latest graphics hardware would drive further sales gains in the current quarter.

Shares, whose value has nearly doubled over the past three months as they rallied to a four-year high, rose 6% to $5.51 in after-hours trading.

The Silicon Valley company, battered by a shrinking market for personal computers, is trying to turn around operations after four straight years of losses.

The second-largest supplier of chips for PCs after Intel Corp., AMD targets operating profitability, on an adjusted basis, in the second half of the year.

For the current quarter, AMD projects a 15% to 21% revenue increase from the second quarter, compared with the 18% projected by analysts surveyed by Thomson Reuters.

AMD's quarterly results follow Intel Corp. and Qualcomm Inc.'s reports on Wednesday. Though Intel reported a 51% drop in profit, largely tied to layoffs, the results indicated the PC market was stabilizing as Intel reported a 3% revenue decline from "client" device business, which includes PCs.

AMD has been trying to reduce its reliance on PC sales, developing chips for gaming systems and customized chips to order for other suppliers. But PC chips remain its biggest business.

Last quarter, AMD announced a joint venture in China, the fastest-growing regional server market and, by some accounts, the world's second-largest server market, after the U.S.

Over all, AMD reported a profit of $69 million, or 8 cents a share, compared with a loss of $181 million, or 23 cents a share, a year earlier. The results were driven by a gain from another joint venture in China with Nantong Fujitsu Microelectronics Co.

Excluding certain items, AMD reported a loss of 5 cents a share, compared with a year-earlier loss of 17 cents a share.

Revenue rose 9% to $1.03 million, well above the company's projection.

Analysts surveyed by Thomson Reuters had projected an adjusted loss of 8 cents a share on $951.3 million in revenue.

Gross margin improved to 31.1% from 24.6% a year earlier and 32.3% in the previous quarter.

Write to Maria Armental at maria.armental@wsj.com

(END) Dow Jones Newswires

July 21, 2016 17:45 ET (21:45 GMT)

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