The big question that has been going through the minds of many is how much marketshare did AMD take back and how would that affect the bottom line? We know the second half of that question, but it is still up in the air how much AMD has taken from Intel. We know that they have, primarily due to the amount of money that AMD has made. Now we just need to find out how much.
Q2 revenue surpassed the expectations of both the Street and what AMD had predicted. It was not a mind-blowing quarter, but it was a solid one for what has been a slowly sinking AMD. The Q2 quarter is of course very important for AMD as it is the first full quarter of revenue from Ryzen parts as well as the introduction of the refreshed RX 500 series of GPUs.
The Ryzen R7 and R5 parts have been well received by press and consumers alike. While it is not a completely overwhelming product in every aspect as compared to Intel’s product stack, it does introduce an incredibly strong dollar/thread value proposition. Consumers can purchase an 8 core/16 thread part with competitive clock speeds and performance for around $300 US. That same price point from Intel will give a user better single threaded and gaming performance, but comes short at 4 cores/8 threads.
The latest RX series of GPUs are slightly faster refreshes of the previous RX 400 series of cards and exist in the same price range of those previous cards. These have been popular with AMD enthusiasts as they deliver solid performance for the price. They are also quite popular with the coin miners due to the outstanding hash rate that they offer at their respective price points as compared to NVIDIA GPUs.
AMD ended up reporting GAAP revenue of $1.22B with a net income of -$16M. Non-GAAP net income came in at a positive $19M. This is a significant boost from Q1 figures which included a revenue of $984M and a net income of -$73M. The tail end of Q1 did include some Ryzen sales, but not nearly enough to offset the losses that they accumulated. These beat out the Street numbers by quite a bit, hence the uptick in AMD’s share price after hours.
The server/semi-custom group did well, but is still down some 5% as compared to last year. This is primarily due to seasonal weaknesses with the consoles. Microsoft will be ramping up production of their Xbox One X and AMD will start to receive royalties from that production later this year. AMD has seen its marketshare in the data and server market tumble from years past to where it is at 1% and below. AMD expects to change this trend with EPYC and has recorded the initial revenue from EPYC datacenter processor shipments.
We cannot emphasize enough how much the CPU/GPU group has grown over the past year. Revenue from that group has increased by 51% since last year. We do need to temper that with the reality that at that time AMD had not released the new RX series of GPUs nor did they have Ryzen. Instead, it was all R5/R7 3×0 and Fury products as well as the FX CPUs based on Piledriver and Excavator cores. It would honestly be hard for things to get worse than that point of time Still, a 51% improvement with Ryzen and the RX 5×0 series of chips is greater than anyone really expected. We must also consider that Q2 is still one of the slowest quarters in a year.
AMD expects next quarter to grow well beyond expectations. The company is estimating that revenue will grow by 23%, plus or minus 3%. If this holds true, AMD will be looking at a $1.5B quarter. Something that has not been seen for some time (especially post foundry split). The product stack that they will continue to introduce is quite impressive. AMD will continue with the Ryzen R7 and R5 parts, but will also introduce the first R3 parts for the budget market. RX Vega will be introduced next week at Siggraph. Threadripper will be released to the wild as well as the x399 chipset. EPYC is already shipping and they expect that product to grow steadily. Ryzen Pro and then the mobile APUs will follow up later in the 2nd half of the year. Semi-custom will get a boost when Microsoft starts shipping Xbox One X consoles.
What a change a year makes. Lisa Su and the gang have seemingly turned the boat around with a lot of smart moves, a lot of smart people, and a lot of effort. They are not exactly at Easy Street yet, but they are moving in the right direction. Ryzen has been a success with press and consumers and sets them on a level plane with Intel in overall performance and power. The RX series continues to be popular and selling well (especially with miners). AMD still has not caught up with demand for those parts, but I get the impression that they are being fairly conservative there by not flooding the market with RX chips in case coin mining bottoms out again. The demand there is at least making miners and retailers happy, though could be causing some hard feelings among AMD enthusiasts who just want a gaming card at a reasonable price.
AMD continues to move forward and has recorded an impressive quarter. Next quarter, if it falls in line with expectations, should help return AMD to profitability with some real momentum moving forward in selling product to multiple markets where it has not been a power for quite some time. The company has been able to tread water for the past few years, but has planned far enough ahead to actually release competitive products at good prices to regain marketshare and achieve profitability again. 2017 has been a good year for AMD, and it looks to continue to Q3 and Q4.