AMD Seeks to Gain Market Share from Intel and NVIDIA

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Part 15
AMD Seeks to Gain Market Share from Intel and NVIDIA PART 15 OF 22

Could AMD Report Double-Digit Revenue Growth in 2017 and Beyond?

AMD’s product launches in 2017 and 2018 

In the earlier parts of this series, we saw that Advanced Micro Devices (AMD) is looking to gain market share by tapping the high-end markets that generate higher margins. AMD would launch its complete range of Ryzen CPUs (central processing units), Vega GPUs (graphics processing units), and EPYC processors in the second half of 2017 and first half of 2018.

These new products would drive AMD’s fiscal 2017 and 2018 revenues and help the company return to net profitability.

Could AMD Report Double-Digit Revenue Growth in 2017 and Beyond?

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AMD’s 2016 revenues

After falling 28% YoY (year-over-year) in fiscal 2015, AMD’s revenues grew 7% YoY in fiscal 2016. Its EESC1 revenues rose 5% YoY, driven by strong demand for semi-custom chips for Sony’s (SNE) new PlayStation 4.5.

Revenues for AMD’s CG (Computing and Graphics) segment rose 9% YoY as strong demand for the Polaris GPU more than offset weak demand for PC CPUs. Intel’s (INTC) client computing revenues rose 2% YoY while NVIDIA’s (NVDA) gaming revenues rose 44% YoY during the same year. 

AMD was outperformed by its competitors as they earned a major portion of their revenues from high-end markets. AMD seems poised to take a piece of this robust growth in the high-end markets in 2017.

2017 revenue guidance

AMD expects its 2017 revenues to grow approximately 10%–13%, which equates to annual revenues of ~$4.9 billion. This is below the analysts’ estimate of slightly over $5 billion in annual revenues. The company’s revenues are seasonally strong in fiscal 2H17, with fiscal 3Q17 being the strongest quarter as game console makers prepare for holiday sales.

For fiscal 2Q17, AMD expects its revenues to increase 12% YoY, driven by strong sales of its Ryzen 7 and 5 CPUs. On the other hand, Intel expects its revenues to rise 6.6% YoY. AMD could see slow or negative growth in its GPU sales in fiscal 2Q17 as NVIDIA launched its Titan X series ahead of AMD’s Vega GPU. NVIDIA expects its revenues to rise 39% YoY in 2Q17.

AMD’s revenues could grow significantly in 3Q17, which would include sales of its Vega GPU and EPYC server processors. Moreover, there could be strong demand from Microsoft (MSFT), which is preparing to launch its Scorpio game console at the end of 2017.

AMD’s product mix

AMD plans to launch its complete premium product portfolio—including Vega GPU, EPYC server processors, Ryzen Mobile series, and Radeon Instinct SoCs (system-on-chips)—in 2018. This release could help the company increase its revenues by double-digit percentage points in 2018.

This release could also change the company’s product mix, with premium products accounting for a major portion of its revenues driving its gross margin in fiscal 2017 and beyond. We’ll take a look at the company’s gross margin in the next part of this series.

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