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AMD’s Revenue Seasonality Changes in 2018

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Apr. 16 2018, Published 9:22 a.m. ET

AMD’s revenue seasonality

Advanced Micro Devices (AMD) is currently on a growth spree given the strong implementation of its product road map. Its 2017 revenue rose 25% YoY (year-over-year), largely driven by strong sales of its Ryzen CPUs (central processing unit) and Radeon GPUs (graphics processing unit).

Strong demand for GPUs from cryptocurrency miners and EPYC server CPUs also helped boost its growth.

AMD is expected to witness strong revenue in 1Q18 as it starts implementing new accounting standards. These new standards will change the timing of when AMD realizes revenue from its semi-custom business. Before these new accounting standards were applied, AMD reported double-digit sequential growth in the second and third quarters, just like NVIDIA (NVDA), and sequential declines in the first and fourth quarters. Now, AMD will report double-digit sequential growth in the first and fourth quarters.

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The 1Q18 revenue estimate

As per its new accounting standards, AMD expects its 1Q18 revenue to rise 31.3% YoY and 15.7% sequentially to $1.6 billion. This revenue includes full-quarter sales of its Ryzen Mobile and Ryzen Pro APU (accelerated processing unit) and initial sales of its Ryzen 5 2400G and Ryzen 3 2200G mobile PC (personal computer) gaming processors, which it launched in February 2018. The quarter will also include bulk GPU sales to Intel (INTC) for its new mobile PC gaming processor and Apple for its iMac Pro.

AMD will also report sales of its Vega GPUs to Intel, which is using the graphics cards in its mobile PC gaming platform, and Apple, which is using the cards in its iMac Pro. AMD will also report the GPU sales it made to cryptocurrency miners.

AMD’s revenue estimates compared to those of its peers

Even NVIDIA expects its 1Q18 revenue to remain sequentially flat due to strong demand from crypto miners. This should be better-than-expected growth given that its first quarter is usually a seasonally weak one. However, Intel expects to report a 12% sequential revenue fall in the quarter, as its CPUs have been hit by the chip design flaws Spectre and Meltdown.

AMD is also dealing with the Spectre flaw, but any loss in CPU sales is expected to be more than offset by strong demand for its GPUs.

Analysts are also bullish about AMD’s 1Q18 revenue. We’ll look into this next.

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