Advanced Computing in the Age of AI | Tuesday, May 17, 2022

Data Center Sales Help AMD Buck Intel, Nvidia Stock Drops 

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Editor's note: this story was updated on January 29 to reflect AMD's earnings announcement.

Insurgent chip maker Advanced Micro Devices defied the recent stock drops of rivals Intel and Nvidia with a year-end and quarterly earnings after-market announcement that sent AMD stock up more than 10 percent in extended market trading.

Meanwhile, Nvidia on January 28 saw its shares drop more than 15 percent after lowering its Q4 guidance based on weak data center and gaming processor sales, along with weaker demand in China. The news followed a downbeat forecast for 2019 from Intel late last week that pushed that company’s stock price down as well.

For AMD, the company reported net income in Q4 of $38 million compared with a $19 million loss YoY. Revenue rose to $1.42 billion from $1.34 billion in the fourth quarter of 2017. For 2018, AMD reported revenue of $6.9 billion, growth of 6.3 percent.

For 2019, the company said it expects “high single-digit percentage revenue growth driven by Ryzen, Epyc and Radeon data-center GPU product sales as the company ramps 7nm products throughout the year.”

“Unlike some of the other earnings announcements we have seen so far, AMD appears to have bucked many of the trends like China and CSP purchase pauses impacting other earnings announcements,” industry watcher Patrick Moorhead, president and principal analyst, Moor Insights & Strategy, told EnterpriseTech. “2018 was AMD’s most profitable year since 2011. This is a really big deal as AMD needs these profits to plow into future designs and invest in growth, a sharp contrast from prior years. AMD said that 65 percent of Q4 sales were from new products like Ryzen, Epyc, and Radeon datacenter GPUs…. No longer are we asking if ‘AMD will survive’ or ‘if AMD will be back.’ AMD is back for a while and now it’s up to AMD to prove it has staying power.”

Regarding AMD’s data center server processor revenues, Moorhead said it’s “finally starting to kick into gear (though), as expected, more slowly than PC-driven revenue. While a PC manufacturer can qualify a consumer desktop PC platform in 90 days, it takes over a year to test before going into a branded, enterprise server. Public cloud players split the difference right in the middle between six to none months of qual cycles, which is where most of AMD’s business is today. AMD said that data center revenue for CPUs and GPUs accounted for ‘mid-teens’ percent of its overall revenue in Q4 which I think is a big deal and shows data center progress.”

As for Nvidia, its announcement represents the second consecutive quarter that the Santa Clara company has lowered its forecast. The company’s stock, which peaked at $292 per share last October, fell to a low-point of $133 on Jan. 29. Intel stock, meanwhile, which had been priced at $50 last Thursday, hit a low of $46 the next day.

“In data center, revenue…came in short of expectations,” Nvidia said in a prepared announcement. “A number of deals in the company’s forecast did not close in the last month of the quarter as customers shifted to a more cautious approach. Despite these near-term headwinds, Nvidia has a large and expanding addressable market opportunity in AI and high performance computing, and the company believes its competitive position is intact.”

Moorhead told us that despite the announcement he is long-term optimistic about the company.

“NVIDIA is suffering from two items that Intel cited in its revised forecast,” he said, “which were softness in China and some conservativeness in the cloud mega datacenters consisting of the ‘Super 7,’ like AWS and Azure and Google. Also hitting is reduced gaming demand brought about by consumer’s ‘wait and see’ attitude on NVIDIA’s new ray-tracing and AI accelerated GPU cards. Consumers want to see more games supporting ray-tracing and AI. Older, Pascal inventory is an issue as well as companies ordered two to three times more than they needed during the crypto-currency craze. I’m not concerned long-term at all as the company has the top of the stack datacenter training and gaming capabilities.”

CEO Jensen Huang called Q4 “extraordinary, unusually turbulent and disappointing,” for the GPU pioneering company, adding, “Looking forward, we are confident in our strategies and growth drivers. The foundation of our business is strong and more evident than ever – the accelerated computing model Nvidia pioneered is the best path forward to serve the world’s insatiable computing needs. The markets we are creating – gaming, design, HPC, AI and autonomous vehicles – are important, growing and will be very large. We have excellent strategic positions in all of them,” he said.

The chipmaker expects about $120 million in charges associated with excess inventory of its graphic processing units and other products. Nvidia also cut its guidance for quarterly revenue by $500 million to $2.2 billion.


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