AMD’s Q2 shines as sales jump 26% on Ryzen, Epyc demand

AMD reported better-than-expected second quarter results as sales surged 26% on strong demand for Ryzen PC chips and Epyc server processors.

The company reported net income of $157 million, or 13 cents a share, on revenue of $1.93 billion. Non-GAAP earnings were 18 cents a share.  

Wall Street was expecting AMD to report second quarter revenue of $1.86 billion with non-GAAP earnings of 16 cents a share. AMD shares were up 9% after hours after a healthy run. 

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AMD shares ahead of second earnings. 

AMD CEO Lisa Su said the Ryzen and Epyc revenue more than doubled in the quarter compared to a year ago. The company is also upping its outlook. The company projected third quarter revenue of about $2.55 billion, give or take $100 million, up 42% from a year ago. 

“The year-over-year and sequential increases are expected to be primarily driven by Ryzen and EPYC processor sales and next generation semi-custom products,” said the company.

AMD’s results land as its primary rival Intel has been struggling with its 7nm roadmap delays. Intel also shook up its technology management, but the misfires have given AMD a chance to cut into its larger rival’s market share. But AMD also battles Nvidia in graphics chips.

Simply put, AMD still lives in one competitive neighborhood, but is winning deals with hyperscale cloud players and becoming a viable option in more data centers.

On a conference call, Su said:

We accelerated our server and mobile processor businesses significantly in the second quarter, resulting in Ryzen and EPYC processor revenue more than doubling year-over-year. Importantly, we met our double-digit server processor market share goal as data center products accounted for more  than 20 percent of our second quarter revenue. 

Our focus since launching our Epyc processors has been on building a solid  foundation to drive long-term growth. Our strategy is grounded in driving broad, high-volume adoption with widespread support from industry-leading cloud and hardware providers. 

In enterprise, we have significantly expanded our TAM as the number of AMD platforms has increased by more than 40 percent so far this year

The bullish sentiment around AMD revolves around its server market share and Epyc. AMD has roughly 3% market share of the server market but reached 20% previously with Opteron. Wedbush strategist Brad Gastwirth said in a research note that AMD can gain more server share:

Opteron led the shift to multiple cores, but then AMD wasn’t able to keep their technology lead beyond this chip design cycle with Intel catching up on design and then leveraging their superior manufacturing capabilities to push AMD to the brink of failure.

Why is this time different?  Not only did AMD take the lead with its shift to chiplets, but Intel’s 7nm delay means AMD will be leveraging comparable or superior TSMC process technology for the next 2 years plus.

AMD announced data center wins with Google Cloud, AWS and Oracle. Infrastructure providers such as Dell Technologies, IBM, HPE and Supermicro also announced systems for Epyc.  Patrick Moorhead, principal of Moor Insights & Strategy, said: “I was pleased to see that Epyc server CPUs set records as it doubled revenue year on year. I attribute most of this Epyc growth to cloud service, SaaS and HPC players embracing the platform more and more. It likely took share in the non-IoT server space.”

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