"Our second quarter results demonstrate strong growth driven by leadership products and focused execution", said AMD chief executive Lisa Su. On a non-GAAP basis, operating income was $49 million, net income was $19 million, and earnings per share was $0.02.
As a result of the great success that AMD has had in the market, the company has seen a 19% increase in earnings as compared to previous year. Computing and Graphics. That business segment grew 51%, recording full quarter of RYZEN revenue, and of course, growth in eSports and surprisingly to Wall Street, cryptocurrency demand.
Ever since it came out with its new Zen core architecture late a year ago, AMD has been aggressively pushing its Ryzen line of processors to nearly every computing market its eternal rival Intel has a foothold. The stock slumped back down a bit by early afternoon, but today's price action underscores the strength of the graphics chip market-which was on display in AMD's latest report. In the quarter, AMD said it reached an important milestone by recognizing initial revenues from EPYC datacenter processor shipments.
While both AMD and Intel look poised to take advantage of that market, AMD has made some incremental moves that could put it ahead of Intel.
The company's forecast for non-GAAP operating expenses this quarter was $400 million, notes Ramsay, above what he was modeling at $376 million, but "we applaud the investment", even if it means "near-term leverage is limited". The stock trades for 20 times what AMD hopes to earn in 2020, and more than 200 times what analysts expect the company to earn this year.
However, what does make a big difference is the price.
AMD shares peaked at 3.0x EV forward sales at the height of its server market share in 2006 and have averaged roughly 2.0x EV to forward sales in growth periods over the past 20 years. That could certainly happen, but neither Intel nor NVIDIA are going to let AMD steal share without putting up a fight.
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Overall, 3 research analysts have rated the stock with a Sell rating, 10 research analysts have assigned a Hold rating and 9 research analysts have given a Buy rating to the stock.
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