$AMD Q3 2019 Earnings DD

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by DuduOson

Prepare for some serious autism but this is the real deal. AMD has been a powerhouse recently, with Zen 2 stomping all of Intel’s offerings on all fronts (since its release on August 7th): 2X performance at 0.5X the cost and 0.5X the power draw (big deal) on the top SKU.

Source 1

“As I have traveled around speaking to vendors, customers, ISVs, even teams designing hardware for future space missions, there is a common theme: giddiness over Rome [Zen2].”

Source 2

“we are talking about something arguably more exciting, or at least the ability to more profoundly impact an industry (data centers): AMD’s EPYC 7002 series [Zen 2] is ready and their line-up and ultimately the resulting performance is the most exciting and competitive we have seen ever out of AMD in the server space.”

This is a colossal shakeup in the industry — but I can hear doubters shouting “but Intel’s entrenched in the server space! Performance dosen’t matter because of partnerships!”

Google and twitter have announced using AMD’s new chips

AWS is using AMD’s new chips

The military is using AMD’s new chips

This shakeup is unprecedented. What about mobile though?

Just yesterday, Microsoft will reportedly be using new mobile Zen chips in its next-gen Surface devices

Zen 2 in the desktop space has been selling like hotcakes, and the consensus is there’s almost no reason to buy Intel at this moment. Obviously desktop is less important than server and mobile, but it shows consistency and mindshare growth.

AMD continues to lag behind Nvidia in GPU add in boards (AIBs), but it has regained some marketshare with its new 7nm RX5000 series being very competitive at their price points.

Marketshare source

To top it all off, AMD’s Q2 earnings posted conservative guidance. They’ve been trading in a channel, leading me to believe not all of this information is priced in. AMD is poised for a massive beat.

tl;dr buy shares if you’re a boomer, late-october mid $30s calls if you have some balls. Roll those into FDs the week of earnings (Oct. 23rd) depending on IV and circumstances, hold through ER if you’re a true autist.

 

 

 

Disclaimer: Consult your financial professional before making any investment decision.

 

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