AMD Gears Up to Report Q2 Earnings: What's in the Cards?

Advanced Micro Devices AMD is slated to release second-quarter 2020 results on Jul 28.

The company projects second-quarter 2020 revenues to be roughly $1.85 billion (+/-$100 million).

For second-quarter 2020, AMD expects robust sales from Ryzen and EPYC processor to drive revenues. Management anticipates Semi-custom revenues to gain from production increase to support the launch of the latest Xbox Series X and PlayStation 5 gaming consoles scheduled for holiday season of 2020.

The Zacks Consensus Estimate for revenues stands at $1.85 billion, suggesting growth of 21% from the year-ago reported figure.

The Zacks Consensus Estimate for second-quarter earnings is pegged at 16 cents per share, unchanged over the last 30 days. The figure indicates an improvement of 100% from the prior-year quarter.

Factors to Note

Solid uptake of latest Ryzen, Radeon and EPYC server processors in the PC, gaming, cloud, HPC and data center verticals, triggered by coronavirus-led work-from-home wave, is expected to have benefited second-quarter performance.

Particularly, AMD’s second generation of its EPYC processors (code-named Rome and built on its Zen 2 microarchitecture) have been witnessing adoption by notable cloud players including Amazon Web Services, Microsoft Azure, Google Cloud, IBM Cloud, and Oracle Cloud.

Notably, AMD EPYC processors have been adopted by multiple high-performance computers that include seventh fastest supercomputer in the world and four of the 50 highest-performance systems on the bi-annual TOP500 list. The processors have also been witnessing adoption in advanced science and health research with new installations at Purdue University, Indiana University and CERN.

During the second quarter, AMD announced that its second-generation EPYC processors will help NVIDIA NVDA in delivering high-performance computing capabilities to customers to support diverse AI workloads.

This momentum in latest EPYC processors might have contributed to server revenue growth in the second quarter.

Moreover, AMD’s latest Radeon Pro 5600M Mobile GPUs based on 7 nanometer (nm) RDNA architecture have been implemented in Apple’s AAPL 16-inch MacBook Pro laptops to enable advanced graphics performance.

Increasing popularity of the company's products instill investor confidence in the stock. Notably, shares of AMD have returned 24.3% year to date, compared with the industry’s rally of 6.9%. The company currently carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Management also remains optimistic regarding growing clout of Ryzen 4000 mobile processors families across leading OEMs.

In fact, to capitalize on the growing demand, AMD expanded Ryzen PRO 4000 Series Mobile family with x86 7nm-based commercial notebook processors during the second quarter to enable remote work capabilities with advanced computing performance in order to facilitate business productivity. This is expected to have strengthened its competitive position against Intel INTC in the commercial market.

Markedly, encouraging trend in PC shipments in the second quarter, driven by increased demand and improvement in the supply chain is expected to have favored second-quarter performance.

Moreover, incremental revenues generated from Radeon RX 5500 GPU, Athlon PRO processors integrated with Radeon Vega Graphics, are likely to have contributed to the second-quarter performance. During the quarter under review, the company inked a multi-year partnership with Oxide Games to co-develop advanced graphics technologies for cloud gaming.

Advanced Micro Devices, Inc. Price and EPS Surprise

 

Advanced Micro Devices, Inc. Price and EPS Surprise

Advanced Micro Devices, Inc. price-eps-surprise | Advanced Micro Devices, Inc. Quote

However, coronavirus crisis-induced macroeconomic weakness might have weighed on growth. Further, increasing expenses on product development amid stiff competition in semiconductor market are likely to have limited margin expansion in the second quarter.

Key Product Roll Outs in Q2

During the second quarter, AMD introduced three new second generation EPYC Processors, EPYC 7F32, EPYC 7F52 and EPYC 7F72. These 7Fx2 series of processors feature enhanced performance capabilities that are designed to handle enterprise workloads like database, commercial, hyperconverged infrastructure workloads and high-performance computing (HPC).

Moreover, the company launched Radeon Pro VII workstation graphics card. It is designed to support complex computer aided engineering (CAE) simulations and the development of HPC applications.

AMD also expanded third generation Ryzen desktop processor family with Ryzen 9 3900XT, Ryzen 7 3800XT and Ryzen 5 3600XT processors to aid users maximize performance of complex workloads and higher boost frequencies to enhance gaming experience.

Just Released: Zacks’ 7 Best Stocks for Today

Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.

These 7 were selected because of their superior potential for immediate breakout.

See these time-sensitive tickers now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
 
Intel Corporation (INTC) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research