AMD Reports 23% Revenue Growth and Issues Rosy 2019 Outlook, Stocks Jump

AMD appears to have largely sidestepped the pitfalls that its larger competitors, namely Intel and Nvidia, have suffered at the hands of the slowing China economy and the trade war. Despite falling short on revenue projections, AMD still managed to meet earnings projections of 8% per share, all while predicting a stronger-than-expected 2019 in its guidance. The company also announced that it had restructured its Wafer Supply Agreement (WSA) with Global Foundries to more favorable terms. That news sent investors to the "buy" button in after hours trading, where AMD's stock rose ~10%.

AMD's 2018 revenue weighed in at $6.475 billion, which represent a 23% year-over-year (YoY) increase. AMD paired that stellar growth story with something much more amenable to investors: profit. AMD's 2018 results represent the company's highest profitability since 2011. That was accompanied by a significant reduction to the company's debt load.

AMD's fourth quarter 2018 results, which increased 6% YoY to $1.42 billion, was a key contributor to its 2018 success. Much of those gains came on the back of explosive 50% YoY growth of its Ryzen product line, with unit shipments of its desktop processors compromising 80% of its client compute sales. AMD CEO Lisa Su said the company expects Ryzen sales to improve by 30% next year along with a 50% increase in notebook sales.

AMD also doubled its EPYC sales over the previous quarter, particularly to cloud compute at Amazon, Azure and AWS, as it climbed to record revenue growth in its data center buisness. The improved EPYC sales, paired with the growth of Ryzen, contributed to a richer mix of products with high average selling prices. AMD CEO Lisa Su remarked that the company had gained market share in the fourth quarter of 2018, but didn't elaborate. Su also stated that the company had achieved its goal to claim a "mid-single-digit" data center share in 2018.

The global GPU oversupply impacted AMD's quarterly earnings and the company expects the shortages to persist for some time, though it didn't provide firm projections. The oversupply comes as a side effect of the collapse of the blockchain (i.e., cryptocurrency mining) market, which AMD reported mad a 'negligible' impact on its revenue for the fourth quarter of 2018. The company also isn't projecting any meaningful blockchain-derived revenue in the future.

16 comments
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  • JamesSneed
    Very good news. Keep it going in 2019. We need a real competitor to fight it out going forward.
  • s1mon7
    Those are stellar results. I don't think anyone expected them to be THAT great. I'm happy to see this, and looking forward to seeing how they turn their profits into development money for amazing upcoming products.
  • adi6293
    Hmm in all honesty I expected the results to be better