AMD’s revenue is stronger than peers’ revenues
Advanced Micro Devices (AMD) stock rose more than 20% after its fourth-quarter 2018 earnings were better than those of peers Intel (INTC) and NVIDIA (NVDA). Intel and NVIDIA have been hit by the demand slowdown in China, the crypto bubble burst, and oversaturation in the data center market. However, AMD continued to grow in this slowdown by gaining market share from competitors.
AMD’s fourth-quarter 2018 revenue
AMD’s fourth-quarter revenues rose 6% YoY but fell 14% sequentially to $1.42 billion, missing analysts’ estimate of $1.44 billion by 1.4%. This slight miss was lower than NVIDIA’s revised revenue guidance of $2.2 billion, which was 18% lower than its previous guidance.
AMD’s 6% YoY revenue growth was lower than Intel’s 9.4% growth but better than NVIDIA’s estimated 24% YoY revenue decline for the fourth quarter of fiscal 2019, which ended January 27. AMD’s revenue was driven by strength in the PC and server CPU (central processing unit) demand, which also drove Intel’s revenue.
AMD also saw strength in data center GPUs (graphics processing units), which was partially offset by declines in consumer GPU and semi-custom markets.
AMD gains data center GPU market share from NVIDIA
While AMD reported strength in data center GPU demand, NVIDIA reported weakness in the same in its revised guidance. AMD signed new data center deals, whereas NVIDIA failed to sign new deals, indicating that the AMD is taking up market share from NVIDIA.
During the fourth-quarter earnings call, AMD’s CEO Lisa Su stated that data center CPU and GPU accounted for a mid-teens percentage of overall fourth-quarter revenue, which equates to $213 million. She added that the data center CPU and GPU mix was “roughly similar,” which means it earned ~$100 in revenue from data center GPU. We estimate NVIDIA’s data center revenue to fall to $750 million in the fourth quarter of fiscal 2019.
Assuming that NVIDIA and AMD are the only two players in the data center GPU market, AMD’s market share increased from 0% in the fourth quarter of 2017 to over 11% in the fourth quarter of 2018.
The above earnings show that AMD performed better than NVIDIA, and thus the two stocks moved in opposite directions in the last week of January. Next, we will see whether AMD succeeded in meeting its 2018 financial targets.
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