The revenues for AMD in Q3 of $1.64 billion shows a 26 percent increased year-over-year and up 34 percent quarter-over-quarter. Lisa Su, the mighty AMD CEO said that Ryzen family combined to significant graphics growth, resulting in a 74 percent increase in the Computing and Graphics segment revenue year-over-year.
The general investment is paying off, but it is hardly surprising that AMD hit such high growth numbers as the CPU business for skyrocketed with the introduction of Ryzen. Ryzen 5 and Ryzen 7 processors reached 40 percent to 50 percent of desktop market share at strategic e-tailers worldwide, which definitely sounds to us like the best-case scenario, cherry picking.
Back to some more numbers. AMD’s gross margin was 35 percent, up 30 percentage points year to year and up two percent quarter to quarter. Operating income was $126 million, compared to an operating loss of $293 million a year ago and operating income of $25 million in the prior quarter.
Net income was $71 million, compared to net losses of $406 million a year ago and $16 million in the prior quarter. Earnings per share were $0.07, compared to losses per share of $0.50 a year ago and $0.02 in the prior quarter.
AMD launched Ryzen 3 and Ryzen PRO in this quarter and PRO has been adopted by Dell, Lenovo and HP among others.
Ryzen PRO-based offerings, which have been adopted by all major commercial PC providers, including Dell, Lenovo, and HP, expanded its presence in the commercial space.
AMD is preparing to ship Ryzen Mobile in Q4 with Acer, HP and Lenovo announcing some systems in the same quarter. OEM adoption is accelerating as customers ramp shipments in advance of the holiday sales cycle.
AMD achieved record GPU revenues in the quarter based on significantly improved ASPs and higher unit shipments than a year ago. This was driven by a strong demand from Polaris and Vega based GPUs in both the gaming and cryptocurrency markets. For some reason, AMD’s CEO refers to this market as a blockchain market, probably as it sounds better to investors. Vega RX is significantly outpacing the previous premium Radeon GPUs at enthusiast level.
AMD confirmed that its Radeon Instinct MI25, GPU compute solution is shipping in volume to mega-cloud data centers that want to experiment with something that is not Nvidia nor Intel based. Radeon Pro WX 9100 profession graphics cards started shipping late in Q3 2017.
Amazon Web Services announced its adoption of AMD Radeon Pro technology to power Amazon AppStream 2.0. There is also an announced cooperation with Baidu with the goal to build more flexible and powerful AI computing platforms based on Radeon Instinct.
Enterprise, Embedded and Semi-Custom segment revenue was approximately flat year-over-year and increased 46 percent sequentially. AMD enjoyed seasonal demand for Sony's PlayStation 4 Pro and Microsoft's Xbox One X holiday season sales combined with Epyc datacenter revenues.
EPYC datacenter shipped to key cloud and OEM datacenter customers. Epyc is deployed by three of the super seven mega datacenter providers including Baidu, Microsoft Azure and Tencent. HP Enterprise and Dell are bringing their EPYC-based platforms to market in Q4.
In Q4 2017 AMD expects non-GAAP gross margin to be approximately 35 percent, non-GAAP operating expenses to be approximately $410 million, non-GAAP interest expense, taxes, and other to be approximately $30 million, and inventory to be down sequentially.
The 2017 annual revenue is expected to increase more than 20 percent compared 2016.
All in all, the 2017 plan is working quite well, but despite the good scores, Wall Street was not that impressed. In the aftermarket, AMD's share price dropped 9.61 percent from $14.25 USD to $12.69 as the investors expected more in Q4 2017.
It is very easy to forget that a year to date AMD (market cap $13.492 Billion) was trading at $7.50 so roughly a half of what it was yesterday with dips as low as $6.30 (November 10 2016). And yet these same semiconductor expert investors strongly believe that $198.68 for Nvidia stock and $119.208 billion is justified.
It is all in the eye of the beholder, or how well you are pitching your story.