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AMD's Q2 results illustrate 2018 momentum in servers, graphics, PCs

The company's second quarter sales were up 53 percent from a year ago.

AMD's second quarter results were better than expected as the company continued to gain traction on multiple fronts.

The company reported second quarter earnings of $116 million, or 11 cents a share, on revenue of $1.76 billion, up 53 percent from a year ago. Non-GAAP earnings in the quarter were 14 cents a share.

AMD is benefiting from its EPYC server CPU gaining market share as well as a corporate PC upgrade cycle that has turned out better than expected. IDC said that PC shipments were 62.3 million in the second quarter, up 2.7 percent from a year ago. Gartner also had PC sales growing. In addition, AMD is gaining on strength in gaming and its GPUs.

The tailwind for AMD has added up to solid momentum in 2018. Consider:

CEO Dr. Lisa Su said the company's long-term bets are paying off. "We are confident that with the continued execution of our product roadmaps, we are on an excellent trajectory to drive market share gains and profitable growth," she said.

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AMD saw strength in its computing and graphics unit with revenue of $1.09 billion, up 64 percent from a year ago. The company said its GPU average selling price increased due to Radeon and sales into the data center. Client processor average selling prices fell in the quarter.

Enterprise, embedded and custom revenue was $670 million, up 37 percent from a year ago.

Patrick Moorhead, principal of Moor Insights and Strategy, said AMD is gaining in high-margin areas. He said:

Radeon graphics sales were down driven by a decline in blockchain revenue, but in the grand scheme of things, not very large, a 4% decline. It also appears AMD is starting to get some traction in the commercial workstation market, a very large market profit pool. EPYC saw a sequential unit doubling in hyperscalers, which was expected given prior customer win announcements, but nice to see that execution.

As for the outlook, AMD said third quarter revenue will be about $1.7 billion give or take $50 million. Non-GAAP margins will get a boost from Ryzen and EPYC processors, but will be offset a bit by lower sales of GPUs for blockchain applications. Wall Street was expecting third quarter revenue off $1.757 billion.