AMD CEO Lisa Su expresses strong confidence in Epyc processors as major force in capturing datacenter market share.
AMD reported Q2/2018 earnings announcing its biggest net income quarter in seven years, with revenue up 53% driving a $154M increase in operating income and a $158 improvement in net income from the year-ago quarter. The stock reached a ten-year high. Gross margins increased 3 percentage points year-over-year, with Ryzen units growing by double-digit percentages and Ryzen mobile doubling sequentially. The cryptocurrency impact proved minimal—a 4% decline from 10% to 6% of revenue. Datacenter demonstrated particular strength, with Epyc units and revenue growing more than 50% and Epyc sales to hyper-scalers doubling sequentially. The company's 7nm "Rome" Epyc follow-on with new Zen2 core was considered "healthy" and sampling to customers, a development compared favorably to Intel's plan to ship 10nm datacenter silicon in 2020.
AMD CEO Lisa Su expressed bullish optimism about Epyc's future following the earnings report. She reported that cloud deployments are accelerating and expects cloud giants to increase their Epyc compute instances over coming quarters. While satisfied with progress at Baidu, Azure, and Tencent, Su felt "great" about acquiring a few more cloud customers in the second half. She emphasized that the competitive situation is helping, specifically citing Intel's 10nm datacenter push delayed to 2020, which has prompted more strategic conversations with customers—not just about what AMD can do in the next year, but over the next three years.
Su acknowledged that progress in public cloud datacenters contrasts with a slower enterprise segment. "The sales cycle takes a while and we are building out our GTM with our OEMs. We're hiring BDEs like crazy," she explained. AMD is strategically focusing its go-to-market resources on verticals where it performs well—high-performance computing, tier 2 cloud service providers, big data and analytics workloads, and applications where cost per virtual machine matters. The company leverages advantages including high-performance floating-point units and high-bandwidth single socket design.
Su highlighted a multinational auto manufacturer that evaluated Epyc based on strong memory bandwidth requirements. The company's benchmarking demonstrated that two Epyc servers outperformed three Skylake servers for crash test simulations at scale. After evaluation clusters were transferred to the customer's corporate IT teams, the deployment showed significant performance-per-dollar value, and AMD won the contract. Su noted that her teams have many similar examples across the enterprise sector.
Overall, AMD has achieved another significant milestone in its comeback, with the market seeking alternatives to established providers across server CPUs and datacenter GPUs for machine learning and deep learning training. The company faces formidable competition from entrenched rivals Intel and Nvidia, who "will not go gently into the night." While Intel and Nvidia may not yet take AMD seriously as a long-term threat, this quarter's performance suggests a potential shift in perception.