Opinion: AMD will finally give investors its data center data as business soars

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Advanced Micro Devices Inc.’s data center business will finally get its own spotlight.

After announcing record sales on Tuesday and predicting another record this quarter, AMD AMD,
+1.44%
Chief Financial Officer Devinder Kumar said that starting in the second quarter, the chipmaker will specifically delineate sales from the division which has increased its stock in recent years. This column has argued, as have several Wall Street analysts, for AMD to break out this business segment separately for investors for more than two years.

AMD appears to be gaining market share in the important server business at the expense of its biggest rival Intel Corp. INTC,
+0.22%,
but it was difficult to compare the two directly because AMD did not provide raw sales information for its data center segment, as Intel does. After concluding its merger with chipmaker Xilinx Inc. and announcing the acquisition of data center software company Pensando in recent weeks, AMD plans to address this issue.

From 2018: why AMD thinks it can challenge Intel in servers

Although the change took too long, it comes at the right time, as information provided by AMD shows that data center activity is booming. AMD said revenue from its data center business doubled from a year ago, helping the segment it currently resides in — enterprise, embedded, and semi-custom group sales — to increase its sales. revenues of 88%. Intel, on the other hand, said it saw data center sales jump 22% in the first quarter, which was solid but still at a slower pace than AMD. AMD will move from two reporting segments to four: Data Center, Client, Gaming and Embedded.

There are fears of a slowdown in spending by cloud companies, such as Amazon.com Inc. AMZN,
-0.20%,
an independent data center segment should therefore show signs of this. Asked on the call about recent comments from some cloud companies about slowing investment, chief executive Lisa Su described AMD’s demand as still “robust.”

“We haven’t seen that,” Su said. “We have not seen this particular phenomenon. We see that there has to be good planning, so good planning with our server customers and our big cloud customers, and we are doing that. And our planning extends beyond 2022, also extends into 2023. And from what we can see, that’s robust demand.

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The server, or data center business, has always been a big area of ​​potential growth for AMD, having spent years with a very slim market share before Su decided to challenge Intel, the dominant player. AMD is trying to return as a serious challenger in this market, a role it played for a few years in the early 2000s.

Its more recent success in servers joined strong gains in personal computers and game consoles, leading to AMD’s $5 billion first quarter and its $6 billion first quarter forecast for the current period. even as the overall PC market is now slowing after a huge boost. during the pandemic.

Investors were clearly pleased with AMD’s progress, sending shares up 7% in after-hours trading on Tuesday. Perhaps executives who still refuse to part with important business segments – such as Microsoft Corp. MSFT,
-0.95%
and its cloud computing business Azure, or Meta Platforms Inc. FB,
+0.43%
and Instagram – will see those gains and finally take the plunge.

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