Advanced Micro Devices, Inc. (NASDAQ:AMD) is seeing the payoff for the investment in its new Zen processor architecture and Ryzen CPUs. In the past quarter, it’s seen a massive surge in use of its CPUs, hitting numbers not seen in a decade. A new report pegs AMD market share for x86 computer processors at 31% in Q2, 2017. That’s a double-digit gain over market leader Intel Corporation (NASDAQ:INTC) in a single quarter, and AMD’s largest quarterly gain in history.
Technology website wccftech was first to post about AMD’s record setting surge in market share compared with Intel.
In Q1 2017 — prior to wide availability of the Ryzen series of processors — AMD held a 20.6% share of the x86 CPUs in use, compared to nearly 80% for rival Intel, according to PassMark’s quarterly market share report covered by the tech website.
Challenge to Intel’s Long Dominance
With the introduction of the new Ryzen processors in March, AMD signaled that it was staging a serious challenge to Intel’s long-standing PC dominance. The new AMD CPUs offered serious speed improvements compared to previous generations, while Intel chose a modest bump for its new seventh-generation Kaby Lake CPUs. And with their Zen architecture’s emphasis on multi-core, multi-thread performance — ideal for tackling high demand applications like virtual reality — AMD was aiming to convince computer buyers its CPUs were designed for the future, not the status quo approach of Intel.
That strategy appears to have paid off in a big way. By calendar Q2, those new Ryzen CPUs were readily available. The numbers from the PassMark report are especially impressive given Intel’s historic domination and the fact that quarterly gains and loses over the past decade have almost always been in the 1% to 2% range.
Those numbers also show a surging AMD. Coinciding with volume availability of the new AMD CPUs, Q2 marked AMD’s largest ever quarterly gain over Intel, adding 10.4 percentage points to its x86 market share. That puts AMD market share at 31% — dropping Intel from 79.3% to 69% — the upstart’s highest level in the last 10 years.
The Ryzen launch sparked speculation that AMD had the potential to change the PC industry. That was not hyperbole. Going from a 20.6% share to 30% represents a 45.6% increase in a single quarter.
The Fine Print + Hope for More Gains
It’s important to highlight three points about the PassMark report.
First, the PassMark data is based on CPU usage, not sales. There is obviously a high correlation between the two, but until Intel and AMD release their actual CPU sales data covering the period, that won’t be verified. Second, the data is based on calendar quarters, not financial quarters. And finally, PassMark tracks the data globally, but it is based on usage by PCs running Microsoft Corporation’s (NASDAQ:MSFT) Windows operating system only. That means Mac computers from Apple Inc. (NASDAQ:AAPL) — which use Intel CPUs exclusively — don’t show up in the data.
Qualifiers aside, the PassMark report’s finding on surging AMD market share is a cause for celebration for the chip maker. The Ryzen CPU has proven to be a huge success. And the parade of new AMD processors continues. The powerful Ryzen Threadripper hit the gaming PC market two weeks ago, EPYC processors will be going after AI and data centers, and just last week AMD announced it will be releasing a new line of Ryzen Pro CPUs to take on Intel in the enterprise market.
AMD’s Q2 earnings report is expected at the end of July. With data from the PassMark report showing a huge spike in AMD market share during the time since its Q1 report, expectations are for good news for investors.
Note: The data and graph reported by PassMark was replaced by an updated chart on July 3 showing AMD’s share of CPUs rose from 20.6% to 26.6% –not the 31% on the original version. That changes the numbers, but the 6% increase in AMD CPU usage still remains the largest single-quarter increase for AMD since PassMark began tracking stats in 2004.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
