In yesterday's "Preview: Intel Weak, AMD Q2 Poised for Another Record," we judged AMD's Q2 would beat expectations given the semiconductor supercycle, with revenue growth challenging 90%. We expected Q2 net income of $700M, up 340%+ year over year.
Data Center Attacks for Fifth Straight Quarter, Revenue Share Tops 20% for First Time
Intel's data center has been weak for four straight quarters, decoupling from the sector, while AMD's data center revenue, deeply tied to NVIDIA, keeps hitting records.
Per AMD's Q2 call, data center revenue doubled year over year and grew sequentially, with revenue share exceeding 20% for the first time. That implies Q2 data center revenue of at least $800M; including Xilinx, AMD's data center revenue could challenge $1B.
Previously, Intel Q2 data center shipments fell year over year for the third straight quarter, and ASP fell for the fourth straight quarter. The official explanation was competition and 7nm ramp; in reality, it's because AMD EPYC is shining too brightly.
Intel Data Center ASP Keeps Falling
AMD EPYC revenue set records for the fifth straight quarter, growing high double digits sequentially, with both shipments and ASP rising.
Beyond data center CPU strength, AMD's data center GPU revenue doubled year over year, driven by CDNA2 shipments, expected to keep growing in the second half, though CPU remains the bulk. Meanwhile, cloud customer business formed a clear seesaw with Intel, partly benefiting from attachment to NVIDIA DGX shipments.
Management expects data center to remain strong in the second half, with enterprise ramping, Milan entering 5G, continuing to gain share.
PC Sets Records, Notebook CPU Revenue Records for Seventh Straight Quarter
Intel Q2 notebook revenue up 15% year over year, desktop up 11%; notebook shipments up 40% year over year, the fourth straight quarter above 20%, but ASP fell 17% year over year, also the fourth straight quarter of declines.
By contrast, AMD's Q2 notebook revenue set a record for the seventh straight quarter, commercial notebook shipments doubled year over year, and CPU ASP rose both year over year and sequentially for multiple quarters. Q2 total PC revenue hit a record, with share up for the fifth straight quarter.
On the closely watched second-half PC outlook, Intel and diverged. Intel expects PC to decline sequentially; AMD is optimistic, guiding for at least flat sequentially. Next-gen consoles will be better in the second half than the first.
Conclusion
In recent years, AMD's comeback against Intel has played out continuously, with the two moving in opposite directions. AMD's improvement is comprehensive and qualitative, yet many Intel loyalists refuse to concede. But tech competition is often brutal.
AMD has delivered monster quarters for multiple consecutive periods, but the stock remains capped by the Xilinx deal. AMD still expects the deal to close in Q4, with no signal of acceleration, so the stock hasn't moved much—no need to over-worry.
Near term, AMD has essentially locked up the Philadelphia Semiconductor Index Q2 growth crown, also implying NVIDIA Q2 will likely beat. Long term, AMD's path past Intel continues.