Stifel's 6 Takeaways From AMD's Q2

Advanced Micro Devices, Inc. AMD reported  Wednesday with second-quarter results that signal the company's "near-flawless execution" remains unchanged, according to Stifel.

The Analyst

Stifel's Kevin Cassidy maintained a Buy rating on Advanced Micro Devices with an unchanged $21 price target.

The Thesis

AMD's momentum continued in Q2, and Cassidy identified six takeaways that he said support a continued bullish stance. (See the analyst's track record here.) 

Revenue in the second quarter rose 52.6 percent from a year ago and 6.6 percent from the first quarter to $1.756 billion. The analyst was modeling revenue of $1.725 billion, roughly in-line with the Street's $1.724 billion. Growth in the quarter came from the enterprise, embedded and semi-custom segments, Cassidy said. 

EPS of 14 cents beat the analyst's estimate of 13 cents per share and the Street's estimate of 12 cents per share.

AMD highlighted the fact that EPYC server revenue and unit shipments both rose more than 50 percent sequentially. Encouragingly, AMD maintained its goal of mid-single digit market share at the end of 2018 and is happy with the 7nm EPYC product into 2019, the analyst said. 

Blockchain accounted for around 6 percent of total revenue in the second quarter, which marks a decrease from around 10 percent in the prior quarter. AMD expects a minimal contribution from blockchain in the third quarter and said it should account for a mid-single digit percentage of total revenue for the full year, which is down from a prior guide of a mid-to-high-single digit.

AMD said demand for GPUs in the data canter is growing at a better pace than CPUs, but its strategy for the CPU business is focused on large cloud customers.

Revenue guidance of $1.7 billion, give or take $50 million, fell short of the analyst's estimate of $1.735 billion, but AMD's non-GAAP gross margin guidance of around 38 percent beat the analyst's prior estimate of 37.7 percent.

Price Action

Advanced Micro Devices shares were trading up 7.2 percent to $17.20 at the time of publication Thursday morning. 

Related Links:

What Stifel Expects From Advanced Micro Devices' Q2

Q2 Semi Preview: Cowen Confident In AMD, Predicts Near-Term Challenges For Intel