AMD Shares Slide Then Recover On Earnings Beat, Zen 2 CPUs Spectre-Proof, Radeon Production Ramps For Mining Demand

AMD Ryzen

Investors do not seem quite sure how to react to AMD's fourth quarter and full year financial results for 2017. In after hours trading, AMD's share price fell 5 percent to $12.25, following the Sunnyvale chip designer announcing fourth quarter net income of $61 million, or 6 cents per share, versus a loss of $51 million, or 6 cents a share, in the same period a year ago. This morning, however, shares are showing a solid rebound after yesterday's general market volatility.

For the full year, AMD raked in $5.33 billion in revenue en route to a $43 million profit, versus $4.27 billion and a $497 million loss in 2016. So overall the numbers are looking pretty good for AMD.

"2017 marked a key inflection point for AMD as we re-shaped our product portfolio, delivered 25 percent annual revenue growth, expanded gross margin and achieved full-year profitability," said Dr. Lisa Su, AMD president and CEO. "We are even more excited about 2018 as we launch our next wave of high-performance products and continue to position AMD as one of the premier long-term growth companies in the technology industry."

One of the products that will be included the next wave of high-performance goods is Zen 2, which will feature a 7-nanometer manufacturing process. AMD previously said the design on Zen 2 is complete and that it will improve on the original Zen release in multiple dimensions, presumably performance and power efficiency. During an earnings call yesterday, AMD CEO Dr. Lisa Su also said that Zen 2 will not be susceptible to Spectre, one of two recently disclosed major vulnerabilities.

"For Spectre variant 1, we continue actively working with our ecosystem partners on mitigations, including operating system packages that have begun to roll out," Su said. "We continue to believe that variant 2 of Spectre is difficult to exploit on AMD processors. However, we are deploying CPU microcode packages that in combination with operating system patches, provide additional mitigation steps."

"Longer term, we have included changes in our future processor cores, starting with our Zen 2 design, to further address potential Spectre-like exploits," Su added. "We continue to collaborate closely with the industry on these vulnerabilities, and are committed to protecting AMD users on these and other security threats, as they arise."

Zen 2 is still a year away from landing on retail shelves, but it's good to know that mitigations are being put in place on the hardware level, rather than having to continue relying on sometimes buggy software patches.

Dr. Su was a little more standoffish when the topic turned to cryptocurrency and what impact the mining scene might have on AMD's future. The CEO said that cryptocurrency had only a mid single-digit impact on the company's full-year revenue, maybe a little higher, and acknowledged that "crypto was one driver" of its graphics business, in addition to "numerous other drivers."

The bigger question customers want to know is whether cryptocurrency mining will continue to drive up prices of GPUs, and for that Dr. Su did not answer. However, she did say that AMD is capable of producing more GPUs, and that it plans to do exactly that. The bigger challenge, apparently, is a shortage of memory.

"For sure the GPU channel is lower than we would like it to be, so we are ramping up our production. At this point we are not limited by silicon per se, so our foundry partners are supplying us, there are shortages in memory and I think that is true across the board, whether you are talking about GDDR5, or you’re talking about high bandwidth memory. We continue to work through that, with our memory partners and that will be certainly one of the key factors as we go through 2018," Dr. Su said.

We will just have to wait and see how that plays out. AMD also recently hired a pair of executives to lead its graphics division after losing Raja Koduri to Intel, so it will be interesting to see how that works out as well.