Presenting at Computex, Advanced Micro Devices, Inc. (NASDAQ:AMD) showed just how dramatic a transformation it has undergone over the past couple of years. It has repositioned itself as a true leader of the design and computing world. That tactic has certainly reaped major dividends for investors, with the stock now trading at around $14 a share after hovering around $2 a share in 2016.
And AMD has given investors reason to be bullish. The financial figures show a business growing in the high double-digits across all segments and a focus on reducing the debt load.
Revenue is up 19% year-over-year and 24% quarter-over-quarter. Gross margins are reaping benefits from the new products.
AMD’s TAM
In part, investors like AMD’s vast total addressable market (TAM). Personal computers constitute a $28 billion opportunity, gaming and consoles represent $15 billion and datacenters present a $21 billion market. At every level higher performance and performance-per-watt is being demanded and, with the debut of RYZEN, AMD now has the highest performance high-end desktop processor ever.
Compared to the Core i9, for the same price at just shy of a grand, the RYZEN Threadripper delivers “up to 38% more performance” as ranked by Cinebench nT.
On the mobile front, AMD has seen four straight quarters of mobile APU (accelerated processing unit) growth. They’ve developed the first zen-based APU with long battery life and performance that leave competitors in the dust.
Take a look at current CPU performance — 50% more than a seventh-generation APU. And GPU (graphics processing unit) performance? 40% greater than before — and, guess what, it also uses 50% less power. It’s not a technological step forward, it’s a massive leap forward.
The rate of innovation witnessed at AMD is nothing short of impressive and the momentum shows no signs of slowing.
Customers, including all the major tech players, have signed up. Given their heavy computing needs and demands for high-performance processors, they are a logical consumer. PS4, Xbox, MacBook Pro and Alienware are all signed up.
Disrupting Datacenters
Ultimately, as I look to the future, data storage looms large on the horizon. Computing is a big part of the AMD business model and will continue to be. But data centers are an area where growth is already taking off in an even bigger way.
Everyday companies are collecting massive amounts of data. All aspects of consumer data — from web browsing to spending habits to geo-location to communications — are being stored in the cloud, which still has to be stored on a physical server.
With EPYC, AMD is creating a simplified machine intelligence architecture that offers flexible configurations and optimized platforms. Single socket versus the current status quo of dual socket (80% of the server market) with 8 more total cores than Intel Corporation’s (NASDAQ:INTC) E5-2650 V4.
Final Word
AMD is making Intel look like a dinosaur. And while extinction isn’t quite around the corner, AMD is putting the pressure on. They estimate that they can own 10% of the data center market with EPYC within the next couple of years.
Customers have indicated their needs for higher core count and I/O, and AMD has responded with the Zen core architecture, which offers “significantly lower cache and higher scalability.”
AMD is the real deal. The company’s future isn’t just bright, it’s incandescent.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.
