Is Advanced Micro Devices, Inc. (NASDAQ:AMD) Suffering From Shrinking PC Sales?

December 06, 2017, 13:05 pm ET, BY Simon M.- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Advanced Micro Devices, Inc. (NASDAQ:AMD) recent quarterly filing indicated that the company had achieved significant growth in the currently shrinking PC market. However, investors and analysts were concerned that the company recorded minimal growth in unit sales of its processors.

Article Summary

AMD recently reported significant revenue growth in the last quarter

The company did not report an increase in unit sales of its high-end Ryzen processors

The company has a bright future as it competes with Intel for market share

Here’s the trading report on AMD.

The company reported a 26% increase in revenues for the third quarter on an annualized basis, which was largely driven by higher selling prices. This is a major concern for shareholders given that the company registered higher revenues by raising its selling prices instead of growing its market share.

AMD faces stiff competition from Intel Corporation (NASDAQ:INTC) in the PC market with the latter having the lion’s share of this market. However, AMD has demonstrated that its processors can compete with Intel processors of similar nodes, which is an indicator that AMD is ready to compete seriously with Intel for a share of the PC and server processor markets.

A key concern among most shareholders is the fact that AMD did not record a significant jump in unit sales of its high-end Ryzen CPUs in the most recent quarter. This is a major concern because the Ryzen CPUs are billed as equal competitor to Intel’s high-end i7 CPUs, but it seems like the Ryzen CPUs are yet to take over some of Intel’s market share.

The company recorded an increase in demand for its EPYC processors that serve the datacenter market, which compensated for a decline in SoC sales. However, the company did not elaborate on the exact percentage of sales that were composed of EPYC units.

Factors that may work in AMD’s favor in future include the fact that the company is rolling out its Ryzen processors for mobile devices later this year, which means that it will be competing in a larger market than the shrinking PC market. The fact that Intel is matching AMD in prices for its processors indicates that Intel acknowledges AMD competition, which means that it’s just a matter of time before AMD starts taking market share away from Intel.

The company is also set to benefit significantly from the deployment of its EPYC processors among major datacenter operators such as Amazon.com, Inc. (NASDAQ:AMZN) Web Services and Microsoft Corporation (NASDAQ:MSFT) Azure Cloud network.

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