AMD stock crashes 22% after earnings, but CEO is confident | Industry

Advanced Micro Devices saw its stock price plummeted as much as 22.5 percent in after-hours trading, after it reported third-quarter revenues that were slightly less than what the market expected and forecast conservative growth for the fourth quarter.

AMD’s stock fell along with much of the broader market, which was down about 3 percent today based on concerns about the economy.

AMD grew revenues 40 percent to $1.65 billion in the third quarter, compared to the same quarter a year ago. But analysts had expected slightly more revenue of $1.7 billion. AMD saw weaker graphics processing units (GPUs) sales, as AMD’s graphics chips aren’t as competitive as rival Nvidia’s. Also, GPUs related to blockchain mining evaporated in the quarter, while it was a single-digit percentage of revenue a year earlier. Blockchain-based cryptocurrencies have seen diminishing returns from mining, prompting fewer graphics card sales.

But AMD CEO Lisa Su said in a conference call that she believes AMD is gaining market share, thanks to growing traction for its Zen-based processors, which have advantages over rival Intel.

“We remain focused on executing our strategy and delivering our product leadership,” Su said.

In particular, she said that AMD’s Epyc chips, which are based on the Zen architecture, could grab mid-single digit server unit share by year end. She also said that in the longer time, AMD can grab double-digit unit market share. She said 50 percent of revenue is coming from new products. Currently, the stock is down 18.6 percent at $18.55 a share.

Above: AMD Ryzen is now in its second generation.

Image Credit: AMD

AMD said it expects to launch its 7-nanometer GPUs, which could be more competitive against Nvidia’s products, before the end of the year. Su said a 7-nanometer central processing unit (CPU) will ship in 2019.

AMD has been rolling out its second-generation Ryzen desktop chips. The Zen-based architecture can process 52 percent more instructions per clock than the previous generation. AMD rolled out its first Zen-based Ryzen chips in the spring of 2017, and now the Zen technology is spreading through the whole product line.

Su said there was a shift in revenue mix. She had expected client business would be strong, with Ryzen-based laptop chip sales and server chips growing. Graphics performed well in data center customers, but GPU sales were weak in the channel. Su said 54 new laptops are debuting with AMD chips. Client processor average selling price was up during the quarter.

The Enterprise, Embedded, and Semi-Custom segment revenue was down 5 percent at $715 million. The semi-custom chip business is down mostly due to the game console chip sales, which are expected to decline because the consoles are in their sixth year of sales, Su said.

AMD will talk about its second-generation Epyc server chip launch in a couple of weeks at an event. Client, server, data center, and other businesses are expected to grow. This week, AMD announced a partnership with Oracle, offering Epyc-based cloud service instances on Oracle Cloud infrastructure. AMD also recently launched its 32-core AMD Ryzen Threadripper processors for gamers. AMD said those chips were 53 percent faster on multi-thread position than rival Intel.