AMD announced significant gains in datacenter market share and server CPU adoption as enterprises diversify away from Intel and Nvidia.

AMD is undertaking the significant challenge of competing against both Intel and Nvidia in their respectively dominant CPU and GPU datacenter markets. Having steadily grown its datacenter business over the past two years, AMD demonstrated further progress in the fourth quarter of 2019 with Epyc processors and Radeon Instinct GPU accelerators, though the company still has considerable ground to cover in gaining meaningful market share from either rival. AMD may ultimately benefit from a larger overall market expanding faster than in previous cycles, positioning itself as a credible second source for these components and potentially achieving dominant share among upper-tier exascale systems in specialized sectors like HPC simulation and modeling.

President and CEO Lisa Su has refocused AMD, putting the company on track for double-digit server CPU shipment share as it exits 2020, with significant momentum expected from the third generation "Milan" Epyc processors launching in the second half of the year. Su indicated this trajectory could double AMD's server CPU revenue run rate year on year, with genuine potential for the company to reach 20 percent datacenter CPU market share in 2021, supported by competitive pricing pressures and Intel's struggles to deploy its 10 nanometer "Ice Lake" processors in volume.

AMD's demonstrated resilience contrasts with past setbacks, particularly its collapse during the 2009-2010 period when Intel overwhelmed it in the datacenter. While recessions pose ongoing risks that could reshape market dynamics, AMD's steady advancement through its roadmap from "Naples" to "Rome" to "Milan" to "Genoa" and beyond, combined with intensifying cloud adoption and pricing competition, provides reasonable hope for maintaining market position. The company's resurgence in PC processors through Ryzen—aided by Intel's inability to meet demand for Core chips—has created momentum that translates to datacenter credibility, mirroring Intel's three-decade advantage.

In the quarter ended December, AMD reported total sales of $2.13 billion, up 49.9 percent year on year, with net income rising 4.5 times to $170 million, representing 8 percent of revenues. The Enterprise, Embedded, and Semi-Custom segment generated $465 million in revenue, up 7.4 percent, swinging from a $6 million operating loss to a $45 million operating gain, with Epyc CPUs accounting for approximately half the revenue and the majority of operating profits. The Compute and Graphics group posted stronger results, with revenues climbing 68.6 percent to $1.66 billion and operating income more than tripling to $360 million.

AMD's datacenter business represented "middle teens" percent range of Q4 2019 sales, according to CFO Devinder Kumar. Estimates place Radeon Instinct GPU accelerators at $82 million in sales for the quarter (approximately half from Google for its Stadia platform), up 28.4 percent, and Epyc processor sales at $232 million, up 55.7 percent and significantly driven by Rome processors with 48 and 64 cores, yielding total datacenter sales of approximately $314 million, up 14.8 percent. For the full year 2019, AMD achieved approximately $293 million in Radeon Instinct sales and $694 million in Epyc sales, totaling $986 million and representing 14.7 percent of the company's $6.73 billion in annual revenue. If 2020 proceeds as projected, AMD's datacenter revenues should more than double again, especially with game console chip sales resuming with new platforms and PC chip shortages moderating somewhat as Intel increases production of 14 and 10 nanometer processors.