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AMD to Launch 7nm Navi GPU and EPYC Rome CPU in Third Quarter, Stock Rises

(Image credit: AMD)

AMD held its Q1 2019 earnings call on the eve of its 50th anniversary, reporting mixed, yet stronger-than-anticipated results. AMD CEO Lisa Su began the earnings call with news that the company will introduce its 7nm Navi graphics cards in the third quarter. AMD will also begin to ship its 7nm EPYC Rome processors in the second quarter, with the volume launch expected in the third quarter.

Su also revealed that its first graphics card bearing the 7nm Navi architecture is geared for "below where the Radeon VII is positioned from a pricing standpoint." Given the lower price point, it's safe to assume that the initial 7nm Navi GPU will not be a flagship-class product, instead catering to the larger volume in the mid-range segment. As with all graphics architectures, we expect several different cards to emerge to satisfy different segments. Su also did not reveal if the card will support hardware-accelerated ray tracing but said the company would provide updates as the card comes closer to market.

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AMD doubled its Ryzen and EPYC sales year-over-year (YoY), helping to offset lower graphics and semi-custom revenue. Revenue declined 10% on a quarterly basis, which AMD attributes to lower client processor sales. In either case, the company claimed it gained desktop PC market share for the sixth consecutive quarter, but didn't provide specifics.

Su also reiterated the company's projections that it will attain a double-digit share of the server market during the second half of this year.

Overall, AMD reported $1.27 billion in revenue for the quarter, slightly beating analyst expectations, but representing a 27% YoY decline. AMD's gross margins increased 5% to 41%, and the company netted $16 million during the quarter. These solid results come as the company is on the cusp of launching its new 7nm products in the latter half of the year, which explains the company's bullish $1.52 billion prediction for the second quarter.

(Image credit: Tom's Hardware)

Radeon Vega graphics shipments also grew by a "strong double-digit" percentage YoY and quarter-over-quarter (QoQ). AMD's data center GPU revenue also doubled YoY, which helped increase AMD's graphics average selling price (ASP) year-over-year. The company also reiterated that the PlayStation 5 would use a Zen 2 processor paired with the Navi graphics engine.

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Notably, AMD's cash reserves reached the highest levels since the second quarter of 2017 while the company continued to reduce its debt load. That positions the company well for its pending launch of new 7nm products that will span both consumer and data center segments, with Ryzen 3000-series CPUs and Navi GPUs attacking the former, while EPYC Rome processors attack the latter. We expect to learn more details about AMD's Ryzen 3000-series processors and Navi GPUs at Computex in May.