While the announced Q3 2018 financial report is lower than expected, the big hit that AMD got from low GPU sales, which now only accounts for 30 percent of the revenue, was somewhat offset by strong CPU sales.

In numbers, AMD has reported revenues of $1.65 billion, up by four percent compared to the same quarter last year, and down by six percent compared to the previous quarter. The gross margin is at 40 percent, up by four percent Y/Y and up by three percent compared to the previous quarter. The operating expense was raised to $511 million, up by $59M Y/Y and up by $12 million Q/Q. The operating and net income were reported at $150 million and $102 million, respectively, and were up compared to the same quarter last year and down from the previous quarter. Earnings per share raised slightly to $0.09, which is up by $0.03 from the same quarter last year, but down by $0.02 compared to the previous quarter.

According to AMD's CEO, Dr. Lisa Su, the revenue and net income growth is mainly driven by "the accelerated adoption of Ryzen, EPYC and datacenter graphics products, and this managed to offset low graphics channel sales, which is understandable considering the drop in GPU cryptocurrency mining. According to AMD, "Blockchain-related GPU sales in the third quarter were negligible", leaving AMD with high channel inventory and low ASP (average selling price), both of which had a big impact on the GPU revenue.

“We delivered our fifth straight quarter of year-over-year revenue and net income growth driven largely by the accelerated adoption of our Ryzen, EPYC and datacenter graphics products,” said Dr. Lisa Su, AMD president and CEO. “Client and server processor sales increased significantly although graphics channel sales were lower in the quarter. Looking forward, we believe we are well positioned for further market share gains as we continue making significant progress towards our long-term financial targets.”

AMD also reported a $86 million addition to the revenue from its joint venture with THATIC.

AMD's Computing and Graphics segment reported a revenue of $938 million, or a 12 percent growth compared to the same quarter last year, but also a drop of 14 percent compared to the last quarter. The Enterprise, Embedded, and Semi-Custom brought $715M, a decrease in five percent compared to the same quarter last year and up by 7 percent compared to the last quarter. According to AMD, the company is seeing higher server sales, driven by EPYC processors, which somewhat counteracted the lower semi-custom revenue.

During the financial call, Dr. Lisa Su also added that the company expects growth in the server CPU market, reaching single-digit market share by the end of this year, and pushing to double digits in the longer term, something that could keep AMD stock afloat. This will mainly be driven by AMD's 7nm Zen 2 based EPYC CPUs, which are sampling now and will launch next year.

AMD was also keen to note that 7nm VEGA is already sampling and will debut before the end of the year, and 7nm CPUs will be shipping next year.

AMD also gave rather weak Q4 2018 expectations, with revenue of $1.45 billion (+/- $50M), which would be an increase in eight percent compared to the same quarter last year, but a significant drop compared to even the Q3 2018. For Q4 2018, AMD hopes that Ryzen, EPYC and datacenter GPU sales should keep the revenue up and cover for the blockchain-related GPU sales from Q4 2017, which accounted for "low double-digit percent of overall AMD revenue", according to the company.

AMD stock gets a big hit

Despite a decent Q3 2018 financial report, AMD stock took a big hit dropping down to $22.79 before the market closed, which is a 9.17 percent drop. After-hours trading saw even a steeper drop, pushing the share price down to mid $17 mark, a drop of over 25 percent.