A Snapshot of AMD’s Business

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Advanced Micro Devices

AMD (NYSE:AMD) has faced some issues in recent years, but has managed to turn things around of late. The company’s stock price currently stands at nearly 6 times its value from the beginning of 2016. AMD is now looking to challenge Intel with its new Ryzen and EPYC processors, and is on the cusp of taking advantage of its prowess in graphics technology by doing what Nvidia is doing for data centers. To give investors a quick overview of AMD’s business, we have created an interactive dashboard using Trefis’ technology that shows what AMD does, how it has performed in recent years, and how is it likely to grow in the next 2 years.

AMD’s Revenue & EBITDA Composition
  As you can see in the chart above, AMD’s Computing & Graphics division (Dark Grey bar) accounts for nearly 53% of its revenue, with the remaining coming from Enterprise, Embedded & Semi-Custom segment (Light Grey bar). However, Computing & Graphics only accounts for 34% of total EBITDA, despite our expectation that the division’s EBITDA margin will be positive for full year 2017. The figure for the last 2 years was negative, which alludes to the strength that Intel and Nvidia have in the CPU and GPU businesses, respectively. Nevertheless, AMD is doing better in Enterprise, Embedded & Semi-Custom businesses where its EBITDA margin is expected to be 12%-13% for full year 2017.

AMD’s Past Revenue & EBITDA Growth

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Between 2012 and 2015, AMD’s revenue plummeted from $5.4 billion to around $4 billion. However, we estimate that the company’s full year 2017 revenue was up by nearly 20% for 2016 at around $5.2 billion. AMD’s business has improved in the last few years on the back of new processors and graphics card launches, and broader demand driving pricing growth. You can see segment-wise details of its revenue and EBITDA growth on our dashboard.

AMD’s Future Revenue & EBITDA Growth

We expect AMD’s annual revenue to increase from $5.2 billion in 2017 (estimated) to $6.3 billion in 2019, implying a CAGR of 10%. In addition, we expect EBITDA to grow from an estimated $0.43 billion in 2017 to nearly $1 billion in 2019. The company will continue to benefit from a product line refresh including Ryzen and EPYC, strong growth in average processor pricing due to demand for high-end computing, as well as continued expansion in the embedded market.  To see segment-wise details of revenue and EBITDA growth, click here for our dashboard.

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