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Advanced Micro Devices Inc. still looks like a second half story – and still others – as new data center chips are looming on the horizon, at like North Star.
AMD
AMD -0.22%
Tuesday announced a first quarter slightly better than expected, while its revenue declined slightly less than expected. Revenues reached $ 1.27 billion, compared to $ 1.26 billion expected by Wall Street, against $ 1.65 billion a year ago. The chip maker has been facing a difficult comparison from 2018 due to a large jump in chip sales for cryptocurrency extraction last year.
After business hours, stocks jumped about 4%, dropping slightly as the company's conference call progressed. Many of the questions so far focused on the company's efforts in the data center. An analyst asked General Manager Lisa Su if she could remind them of the opportunities and market share gains that the company expects from entering this market.
"By looking at the server market, we know very well that the data center market is slow to develop with any new product," said Su. "We expected that" in the next four to six quarters, we continue to increase our server market share with the goal of achieving a two-digit percentage share. "
Investors turned to AMD's new data center chips to generate additional revenue and earnings, given that it was virtually absent from this fast-growing market until it introduced a new technology. new family of chips based on its zen architecture in 2017. The next chip for data centers from this family, the code name is Rome and its launch is scheduled for the third quarter of this year.
Read more: How AMD thinks it can challenge Intel in servers
Nevertheless, Su's longer view of the data center market may not have been as upbeat as some investors had wanted. At one point, she also said, "This is a multi-year, multigenerational roadmap," referring to several generations of products. She also said that AMD's Rome chips would be able to handle about 80 percent of cloud computing workloads. During the call, AMD shares fell by up to $ 29.75 to close the extended session of approximately $ 28.75. AMD shares have risen nearly 50% this year so far, compared to the S & P 500 index
SPX, + 0.10%
, which is up 17.5%.
An analyst asked what kind of reaction AMD was seeing from its potential customers. Su said that although it does not really call it repression, larger companies are going slower than cloud computing companies.
"The qualification cycles are longer because their qualification cycles [include] both the OEMs and the end customers, "she said.
Do not miss it: the promise of a magic rebound for technology comes with little evidence to support
AMD's chief financial officer, Devinder Kumar, recalled the company's earlier outlook for the rest of the year, noting that, for the full year of 2019, "AMD continues to expect high revenue growth and gross margin above 41%. According to FactSet, the current consensus of analysts for AMD is $ 6.8 billion in 2019, up 5.25%.
"The key short-term controversy depends on the feasibility of this perspective," said Stacy Rasgon, an analyst at Bernstein Research, in his overview of AMD.
Investors have been waiting for a while for the benefits of AMD's new chip family to impact the larger, more profitable market. Indeed, AMD sees some benefits, with stronger sales on PCs despite the problems faced by Intel Corp.
INTC, -0.14%
, but data center and enterprise server chips may take a little longer to achieve the growth expected by some investors.
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