Can AMD’s Revenue Cross The $10 Billion Mark By 2021?

Advanced Micro Devices’ (NASDAQ: AMD) total revenue has grown from $5.25 billion in 2017 to $6.73 billion in 2019, and is expected to further grow to $10.51 billion by 2021.
AMD’s total revenue has grown from $5.25 billion in 2017 to $6.73 billion in 2019, led primarily by the success of AMD’s Ryzen processors and Radeon graphics cards. These products have helped AMD make a dent in the market share of Intel and Nvidia, and have helped drive steady revenue growth over the past 2 years. This growth primarily came from the computing and graphics segment, that has grown by $1.73 billion over this period, with enterprise, embedded, and semi-custom revenue, in fact, dropping by $260 million.
Going forward, we expect computing and graphics revenue to increase sharply in 2021, led by both Ryzen and Radeon products with AMD’s new 7nm chips.

Takeaway:

• AMD’s Computing and Graphics division, which sells microprocessors and graphics processors for notebooks and desktops, is expected to contribute $6.03 billion to total revenue in 2020, making up 69% of AMD’s total revenue estimate.
• The Enterprise, Embedded, and Semi-custom division is expected to bring in $2.73 billion in 2020, to make up 31% of the total revenue estimate.
• The Computing and Graphics division has been the primary driver of revenue growth, and is expected to add $4.26 billion between 2017 and 2021, which is 81% of the additional $5.26 billion that the company is expected to bring in over this period.
• This strong revenue growth, combined with growing margins and an expanding PE multiple, has been key to AMD’s stock growing ~5x since February 2018.
• In our interactive dashboard AMD Revenue: How Does AMD Make Money?, we discuss AMD’s business model, followed by sections that review past performance and 2021 expectations for AMD’s revenue, including comparisons with close competitors, Intel and Nvidia.

A look at AMD’s segments and their contribution to total revenue

(A) Computing and graphics revenue to grow by around $2.5 billion over the next 2 years, to make up 69% of total revenue in 2021

• This segment includes revenue from sales of AMD’s microprocessors and graphics processors, used in both desktops and notebooks.
• Revenue from this segment has grown from $2.98 billion in 2017 to $4.71 billion in 2019, on the back of strong demand for AMD’s Ryzen processors and Radeon graphics cards.
• We expect this growth to continue, driving this metric past $7 billion by 2021.

(B) Enterprise, embedded, and semi-custom revenue to grow by $1.26 billion by 2021, to make up 31% of the total revenue estimate

• This includes revenue from the sale of embedded processors, semi-custom System-on-Chip (SoC) products, technology for game consoles, and server microprocessors.
• Revenue from this segment had remained roughly flat over 2017 and 2018, as AMD has struggled to make a mark in the server and cloud computing segment.
• Revenue dropped to $2.02 billion in 2019, as US China trade tensions weighed down on demand and selling prices.
• However, amidst AMD’s continued acceptance in gaming consoles and efforts to revive its data center business, we expect revenue from this segment to cross $3 billion by 2021.

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