Advanced Micro Devices AMD is scheduled to report second-quarter 2020 results on Jul 28.

Solid momentum in Ryzen, Radeon and EPYC products are expected to have contributed to the to-be-reported quarter’s performance. Further, robust demand for graphic processor units (GPUs), which are now widely utilized in industries like gaming, automotive and blockchain, might get reflected in the second-quarter results.

Coronavirus crisis induced shelter-in-place orders has led to an increase in user engagement for gaming and game streaming. This has been bolstering demand for gaming PCs and hardware, which is likely to have boosted the adoption of AMD’s new graphics cards in the second quarter. This, in turn, is expected to have benefited the to-be-reported quarter’s performance.

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. Per Gartner’s preliminary data, PC shipments in second-quarter 2020 improved 2.8% year over year to 64.8 million units.

Click here to know how the company’s overall Q2 performance is expected to be.

New Product Launches Remain Noteworthy

Incremental revenues generated from Radeon RX 5000 series of graphics card and third generation AMD Ryzen desktop processors, triggered by coronavirus-led work-from-home and online gaming trends, are likely to have contributed to the second-quarter performance.

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 7 nanometer (nm) based commercial notebook processors during the second quarter to enhance 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.

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

Moreover, the company 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.

During the second quarter, AMD rolled out Radeon Pro VII workstation graphics card. It is designed to support complex computer aided engineering (CAE) simulations and the development of high-performance computing (HPC) applications.
 

Strong adoption of new processors is likely to get reflected in Computing and Graphics second-quarter revenues. Notably, the Zacks Consensus Estimate for Computing and Graphics segment for the second quarter is pegged at $1.322 billion, indicating an improvement of 40.6% from the year-ago reported figure.

EPYC Deal Wins Deserve a Special Mention

Solid uptake of second-generation EPYC processors is anticipated to have bolstered server revenues in the second quarter. The company has been securing new deal wins from major enterprise and cloud companies across high-performance computing (HPC) domains.

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

Moreover, second generation of its EPYC processors have been selected by Oracle ORCL to enhance computing performance of its Oracle Cloud Infrastructure Compute E3 platform. Further, IBM Cloud is leveraging the processors to enhance computing performance of its latest bare metal servers.

Increasing popularity of the company’s products instill investor confidence in the stock. Notably, shares of AMD have returned 44.8% year to date, compared with the industry’s rally of 7.3%. The company currently carries a Zacks Rank #2 (Buy).

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Besides, 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.

Also, 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.

Higher EPYC server processor sales and momentum in deals wins may have contributed to the second-quarter Enterprise, Embedded and Semi-Custom revenues. However, coronavirus crisis-induced macroeconomic weakness might have weighed on growth.

Notably, the consensus mark for Enterprise, Embedded and Semi-Custom segment for the second quarter is pegged at $528 million, indicating a decline of 10.7% from the year-ago quarter.

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