Five years after Advanced Micro Devices CEO Lisa Su first joined the company, and almost three years since she got the top job, the payoff for her radical turnaround strategy is finally arriving.
AMD reported a 19% jump in revenue for its most recent quarter, the first that includes sales of its new Epyc chip for servers and Ryzen chip for desktop computers. Along with AMD’s newly raised forecast for total revenue growth for the year approaching 16% to 17%, Wall Street was elated by the results.
AMD’s stock price jumped 11% in aftermarket trading to $15.61, a 10-year high if it holds once regular trading opens on Wednesday. The company’s shares hit $15.55 in midday trading in February, the highest level since they dropped below $16 in 2007 and never recovered. UPDATE: AMD shares hit a new 10-year high of $15.65 during trading on Wednesday but then sold off a bit and closed at $14.76, up almost 5% on the day.
“We made excellent progress in the quarter and reported operating profitability for the first time in three years,” an obviously proud Su told analysts on Tuesday night. That progress should continue next week, when AMD will unveil another piece of Su’s strategy, a revamped line of graphics cards called Vega, at the Siggraph industry conference in Los Angeles.
AMD’s success comes after strong doubts that the chipmaker could even survive. Its stock price was under $2 a share early last year, when all of Su’s new chips were still in development. The CEO realized early on that AMD’s plan for modestly improving its chips wasn’t going to be enough to match strong competition from Intel (INTC) and Nvidia (NVDA). She threw out the road map, hitting revenue in the short-term, and focused on delivering a slate of redesigned high performance products.
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With some of the early products on the new road map now selling well, Su outlined the plan for the remainder of the year. The upcoming Vega line of graphics chips will be shipping for gamers and professional work stations in the third quarter (and Apple is using it in its new iMac Pro expected by year end), she said. Then a laptop version of the Ryzen chip will arrive in time for the end-of-year holiday shopping season.
Still, not everyone on Wall Street is a believer yet. Several analysts asked Su about the impact of graphics card sales to customers who process digital currency transactions. With the price of bitcoin and other virtual currencies at or near record highs, there’s considerable profit to be made in “mining” the cryptographic coins, which requires substantial graphic computing power. But the fear is that the boom in GPU sales will tail off once the market is saturated.
Su conceded that the digital currency mining had caused “elevated demand” for AMD graphics cards, but argued that the core of the market was more dependable and long-lasting demand from video gamers. And AMD (AMD) isn’t counting on continued strong sales related to mining in its financial forecast, she added.
“Our priority, though, really is on our core market, which is the gaming market,” she said. “It’s important to say we didn’t have cryptocurrency in our forecast, and we’re not looking at it as a long-term growth driver. But we’ll certainly continue to watch the developments around the blockchain technologies as they go forward.”