Strong Polaris GPU Sales Likely Drove AMD’s Top-Line Higher In Q3’16

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AMD (NYSE:AMD) is set to report its Q3 2016 earnings on October 20th. Driven by strong sales of Polaris GPUs that support virtual reality, AMD’s revenues in Q3’16 have likely increased on a year over year basis. Furthermore, the company has likely witnessed an uptick in its semi-custom processor sales in the quarter, resulting from the build-up of inventory by game console companies in order to support a higher demand for game consoles during the holiday season. Going ahead, Apple’s launch of its renewed line of Macbook, which has been rumoured to feature an AMD GPU, can further drive the demand for the AMD’s GPUs higher.

However, PC processor sales for AMD have likely remained sluggish in Q3, as PC shipments continued to decline globally for the eighth consecutive quarter in Q3’16. Also, the margins for AMD are likely remain flat in the quarter. It should be noted that the company follows a “water-drop” strategy, in which it aims to increase its market share by selling higher volumes at lower prices.

In the table below, we note the key metrics as expected for the company in Q3:

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Strong Polaris Demand Will Drive Growth In The Computing and Graphics Segment

AMD’s strong second quarter graphics performance was capped by the launch of its new Polaris-based RX 480 GPUs at the end of June. Judging by the initial channel sales and OEM design wins, AMD is confident that the strong demand will continue to drive revenue growth in Q3 2016 and beyond. The company will launch the rest of the Radeon RX family in the near future, which will hopefully add to the growth momentum.

The 14 nm Polaris architecture based Radeon Graphic series extends AMD’s leadership in DirectX 12, gaming and Virtual Reality. Additionally, the high-performance x86 Zen processor core architecture (expected to be launched in the first half of 2017) can help AMD scale across multiple markets including high-performance desktops, servers, notebooks and embedded solutions.

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