AMD believes the first quarter will lead to $1.25 billion in revenue – give or take $50 million. This would lead to a decrease of 12 to 24 percent from last year. The 12 percent sequential decrease is thought to be the result of a less than ideal industry for graphics channel (along with the season). The 24 percent year-to-year decrease is thought to be the result of low graphics sales and surplus channel inventory.
AMD anticipates the non-GAAP gross margin to be around 41 percent during the first 2019 quarter. On top of that, AMD believes it will have a $60 million IP licensing gain that could benefit the operating income and be a record for the P&L licensing gain line.
AMD thinks 2019 will bring single-digit percentage revenue growth as the company increases its 7-nm products. The company anticipates the non-GAAP grow margin will be more than 41 percent for 2019.
The company has been doing well – much more than expected. In 2018, it had a 23 percent increase in revenue – a four-point margin added. It also saw an increase in market share for five consecutive quarters.
AMD’s data market is an extremely powerful market and is having a strong quarter for its GPUs. Why? The company is currently looking at new deployments and workloads.
There’s some concern about the macros and the state of China’s economy, but there’s some short-term concern. Still, the company has the first 7 nm chip for 2019, which is a huge advantage. The goal is to use it to show the company’s strength.
AMD said its customer traction is giving it the confidence to move forward.
However, its first-quarter guidance was not as high as it was anticipated to be. According to AMD, this is the result of a different business model compared to other companies. In essence, the company claims to be more diversified with its gaming, data center and PC segments.
AMD said the company is worth $6.5 billion and has a TAM of $75 billion.
AMD’s gaming in consoles, PCs and the cloud has been good even though there’s been some negativity in the Chinese market.
The company, about four years ago, made some huge bets on 7 nm and architecture and the Epic’s second generation processor. AMD said it was going to double the performance per socket so the results would be better.