AMD outsells Intel at Mindfactory during April

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AMD outsells Intel at Mindfactory during April

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What happened

AMD continues to outperform Intel’s sales at Mindfactory, a German etailer. In April, out of the 33,000 processors sold, 91% were of Advanced Micro Devices, Inc (NASDAQ: AMD). The Ryzen 5 3600 contributed to a third of the total sales.

AMD

So What

The coronavirus COVID-19 outbreak doesn’t seem to have impacted AMD and Intel’s CPU sales in a major way. The April edition of our Mindfactory sales data reveals that sales for both Intel and AMD are only marginally down month on month. This is in-spite of Germany being in a state of a partial lockdown.

Sales volume for both the chip manufacturers actually increased in the second half of March, compared to the first half. AMD’s market share in the first half of March stood at 88.4% while Intel was left with a 11.6% market share. This marked an increase of 240 basis points for AMD from January-end, which is in-line with our previous assessment.

AMD’s bestseller microprocessors for the period were Ryzen 5 3600 and Ryzen 7 3700x, each of which registered a sales volume of 3,660 and 1,770 units, respectively.

In mid-February, the share price of AMD reached an all-time high of $58, later crashing down to around $42. The share bounced back to $50.

The PE ratio of AMD for March 2020 was 108.3 against Intel’s PE ratio of 10. The month on month revenue of AMD saw 16% decline from $2.1B to $1.7B. But the year on year revenue showed a growth of 40% From a previous revenue of $1.2B.

The free cash flows also show a year on year improvement from a previous deficit of $275 million to a deficit of $120 million.

Wherein previously the Debt amounted to $1.48 billion in 2017, it currently stands at $488 million, showing a reduction of roughly $1 billion. Whereas the assets which previously amounted to $3.2 billion have now increased to $5.9 billion leading to an improved debt to asset ratio.

What Now

AMD is now manufacturing 7-nanometer chips, whereas Intel has in the past struggled to make chips at a 10-nanometer scale. AMD is now developing chips at a 5-nanometer scale.

On April 21, AMD announced new third-generation Ryzen desktop processors. The chips are designed to run mainstream PCs for business, gaming, and creative applications.

AMD recently also announced it is “extending the 2nd Gen AMD EPYC™ processor family with three new processors that combine the balanced and efficient AMD Infinity architecture with higher speed “Zen 2” cores for optimal performance on the database, commercial high-performance computing (HPC) and hyper-converged infrastructure workloads.”

The new processors, the AMD EPYC™ 7F32 (8 cores), EPYC™ 7F52 (16 cores) and EPYC™ 7F72 (24 cores), are gonna be adopted by Microsoft (NASDAQ: MSFT), Dell Technologies (NYSE: DELL), Lenovo and VMware (NYSE: VMW)

Amidst the coronavirus-pushed crisis, work-from-home has brought on increased demand for chips, laptops, and other network goods. The enterprise has confirmed this with the CEO Lisa Su commenting that “We’ve seen some of our largest (cloud) customers ask us to accelerate some of our deployments.”

Moreover, due to most countries being under lockdown, the demand for video games, consoles, and graphic chips will see a rise. Online schooling would also increase the demand for chips from cloud companies.

The stock may still continue to grow due to growth in the revenue, and there are fundamental reasons for this growth since the leverage has declined over the years making the company financially flexible. The Investors may hence consider this stock.

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