AMD has announced its imminent addition to the NASDAQ 100, a list composed of the 100 largest companies on the NASDAQ stock market based on total market capitalization. AMD’s stock price has increased enormously over the past few years and doubled since early January 2017. While it’s fallen from its high earlier this year, that drop has occurred in the context of a great deal of stock market uncertainty and concerns about the overall impact of the crypto market’s decline. In retrospect, AMD was hit less-hard by the fall-off in crypto sales than Nvidia, which has publicly declared that it would ship virtually no midrange GPUs this quarter in order to reduce its overall inventory levels.
Equally important, AMD has improved its margins and long-term margin guidance. The company expects its Q4 margin to be 41 percent, up from 34 percent in Q4 2017, “driven by the ramp of Ryzen, EPYC and datacenter GPU processors.” During the same call, CEO Lisa Su identified the 41 percent target as “the low end of our long-term guidance.”
Su has also stated that while AMD wants to gain unit share, it isn’t willing to sacrifice margins to do it, saying: “As it relates to unit share, I think unit share is certainly important. We look at revenue growth overall as important for that business, but I believe we’ll be able to do that at good margins and to continue on our margin path.” Keeping its margins up is critical to keeping Wall Street happy, and AMD has pledged to continue bringing its margins up throughout 2019 and into 2020 as its product mix improves and the last of its Carrizo and Piledriver CPUs shuffle off the mortal coil.
Looking ahead to 2019, AMD’s major challenge will be demonstrating that its 7nm ramps for CPU and GPU have both come off without a hitch. Navi, Epyc (Rome) and updated Ryzen desktop chips are all expected in-market in 2019, but despite rumors to the contrary, nothing we’re hearing suggests a near-term launch date for any consumer 7nm hardware. Our understanding is that Epyc will debut on 7nm before Ryzen does, and AMD has said that volume ramp on Epyc will happen after Q2 2019. This implies Ryzen updates coming in the fall rather than the March-April timeframe. Launch dates for Navi are still unknown, but we’re not hearing anything to suggest a near-term time frame for that part, either. AMD will undoubtedly talk about its roadmaps and plans for 2019 at CES, but we don’t expect to see 7nm hardware launching at the event.
Right now, our expectation is that we’ll see a Ryzen Mobile/APU update in the first part of 2019 since that’s the remaining piece of the Ryzen puzzle that didn’t receive a 12nm refresh this year. Then, the refresh cycle for 7nm Ryzen and Epyc will happen later in 2019 once those parts are ready. Intel, meanwhile, is rumored to be planning a 10-core 14nm CPU in 2019, with its new Sunny Cove architecture debuting at the tail end of the year.
