Advanced Micro Devices, Inc. (NASDAQ:AMD) has been relentlessly launching new silicon this year. New graphics cards and CPUs based on all-new architecture have been released, as AMD stock seeks to gain marketshare from industry leading rivals Nvidia Corporation (NASDAQ:NVDA) and Intel Corporation (NASDAQ:INTC).
The latest product launch has come. AMD on Tuesday announced its new high-powered Epyc processors, designed to take on Intel’s Xeon in the data center and enterprise server space.
Think it’s just tech geeks that are excited? Think again. AMD stock jumped 6% on Tuesday amid the launch, and is ready to tack on another 4% or 5% on Wednesday.
Advanced Micro Announces Epyc
AMD launched its new Epyc series of high-performance CPUs yesterday in Austin, Texas. Like all the company’s latest generations of processors, the new CPU is designed using the company’s Zen architecture.
Its Ryzen CPUs — introduced earlier this year to take on Intel on the desktop — use a multi-core, multi-thread chip. Just last week, the company made headlines at E3 when it launched the high-powered Threadripper CPU, aimed at Intel’s Core i7 in the performance and gaming PC market. That Threadripper packs a pair of the chips that go into the Ryzen.
The new Epyc takes things to a new level, stuffing up to four of those chips into a single CPU. The top-end Epyc 7601 features 32 cores and 64 threads.
This AMD CPU family incorporates additional advanced technology to push the performance envelope, including “Infinity Fabric” high speed connections. There is also advanced on-chip power management (very important for data centers), clock speed boost based on usage levels, 128 lane PCIe I/O, high memory bandwidth and encrypted system memory.
That’s a lot of technical mumbo jumbo, but what it boils down to is speed, efficiency and scalability.
According to Advanced Micro Devices, the Epyc set multiple performance records during testing. In its press release, the company claims it outperforms the competition — that would be Intel’s Xeon — by up to 70% in the $800 price band and up to 40% at the top-end $4,000-plus market.
AMD also claims lower total-cost-of-ownership and up to 20% savings in capital costs compared to Intel’s Xeon.
Partners on Board Inspire Confidence
Claiming hardware superiority, lower cost of ownership and superior technology is one thing, but AMD has a big battle on its hands to take on Intel in the data center.
While its rival dominates the consumer PC space, it practically owns data centers. By some estimates, Intel Xeons are in 99% of those installations. To convince IT departments to consider jumping ship, AMD has brought some high-profile partners on board and showcased them on its Epyc press release.
Among those partners is Microsoft Corporation (NASDAQ:MSFT), a company known for its very close relationship with Intel. Microsoft announced plans to deploy the new AMD CPU as part of its Microsoft Azure cloud service:
“To power Azure, we require the most cutting-edge infrastructure and the latest advances in silicon which is why we intend to be the first global cloud provider to deliver AMD EPYC, and its combination of high performance and value, to customers.”
If Advanced Micro Devices can convince other enterprise users to switch their data centers to PCs equipped with the new Epyc processors, the payoff could be considerable.
In Q1, 2017, IDC says 2.21 million servers were shipped, worldwide — and that number was a decline of 4.6% as enterprise customers held off in anticipation of next generation CPUs. AMD’s new Epyc processors are priced from $400 at the low end to $4,000 at the high end.
Bottom Line on AMD Stock
With Intel Xeon chip powering virtually all of the boxes currently in use, Advanced Micro Devices could generate some serious new revenue if it’s able to break into the server market.
AMD stock — still surging after the Epyc announcement — suggests investors think the company has a shot at it.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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