J P M O R G A N North America Equity Research 06 August 2025 Advanced Micro Devices Solid 2Q Results And 3Q Outlook; Next-Gen AI GPU (MI350 Series) Ramping With Strong Shipments In 2H AMD reported strong Jun-Qtr revenue results (4% better than guidance) with margins/EPS in-line with expectations. Better revenues were driven by stronger client/gaming revenues and slightly better datacenter revenues (AI GPU was down Q/Q as expected due to China restrictions, and EPYC server CPU revenues grew Q/Q to record lev ...

Core Insights - AMD's server CPU market share has reached parity with Intel, both at 50% [1][26] - The article outlines the historical context of Intel's dominance in the CPU market and AMD's resurgence over the past eight years [3][26] Historical Context - Intel's high point began in 2006 with the launch of the first-generation Core microarchitecture, which significantly improved its market reputation [3][5] - By 2011, Intel's Xeon CPUs, based on the Core architecture, gained substantial recognition in the professional market, leading to nearly 100% market share by 2017 [7][9] AMD's Challenges and Turnaround - AMD faced difficulties after the success of its K8 architecture, with its Bulldozer architecture failing to compete effectively against Intel's offerings [5][9] - The introduction of AMD's Ryzen processors in 2017 marked a significant turnaround, featuring the new Zen architecture that improved performance across various metrics [11][13] Competitive Landscape - AMD's Ryzen CPUs offered more cores than Intel's offerings at the time, allowing for superior multi-core performance despite lower single-core performance [13][20] - AMD's Threadripper series targeted the professional market, providing high core counts at competitive prices, which appealed to DIY enthusiasts [16][18] Technological Advancements - AMD's modular design allowed for greater core counts at lower costs compared to Intel's single-die architecture, enabling AMD to enhance its multi-core performance [20][22] - The collaboration with TSMC for advanced manufacturing processes has further strengthened AMD's position in the market, leading to CPUs with up to 96 cores and 192 threads [22][24] Market Dynamics - The article emphasizes that AMD's rise in the professional CPU market is a result of consistent technological upgrades and strategic market positioning [26] - Intel's stagnation in innovation and manufacturing challenges have contributed to its declining dominance in the server CPU market [26][28]

Performance Improvement - AMD's 5th generation EPYC offers a 75% performance uplift compared to the 4th generation in Ericsson packet core solutions [1] - AMD's solutions provide a 40% power efficiency benefit generationally [2] Partnerships and Solutions - Ericsson's packet core is available on both 4th and 5th generation AMD EPYC [1] - Nokia appliance on AMD packet core is available on 2nd, 4th and 5th generation EPYC [2] - ZTE offers packet core solutions [2] Market Presence - AMD is showcasing packet core solutions at MWC 2025 [1] - Ericsson and Nokia are exhibiting their solutions at MWC [1][2]

Solution Overview - AMD presents an EPYC private cloud solution designed to consolidate telco, back office, and AI infrastructures, aiming for cost reduction, opportunity creation, and optimization [2][3] - The solution is built based on customer requirements, demonstrating telco performance, regulatory compliance, cost-effectiveness, and the ability to add next-generation workloads [4][5] - AMD showcases the ability to run AI workloads safely on the same hardware as telco operations, ensuring phone calls can be delivered reliably [6] Performance and Scalability - The solution demonstrates scalability by supporting 45 to 128 users with latency under 100 milliseconds, even with increasing token loads [8] - The solution scales from 5 million packets per second to 25 million packets per second, with zero dropped packets, indicating high quality [11][12] - AMD's solution achieves a 39% TCO reduction over five years for a small cell site [12] Power Efficiency and Optimization - The solution optimizes power consumption based on diurnal patterns, utilizing 64 cores 48% of the time, 2P cores 35% of the time, and 256 cores 17% of the time [13][14][15] - AMD's solution can save 68% over running a traditional two-core, two-system cluster [13] - AMD leverages Kubernetes power management to dynamically adjust CPU power consumption based on traffic load, potentially reducing power from 500 watts to 100-300 watts per processor during low traffic [21][22] Technology and Open Source - AMD emphasizes the importance of performance, efficiency (TCO, power), and scalability, highlighting the EPYC architecture [17] - AMD highlights its investment in open source, particularly within the Linux Foundation and CNCF, contributing to Kubernetes power management [19][20][21]

Core Insights - HCLTech and AMD have formed a strategic alliance to enhance enterprise digital transformation globally through advanced AI, digital, and cloud solutions [1][2][6] Group 1: Collaboration Details - The partnership aims to create a robust digital ecosystem that improves customer experience and operational efficiency by co-investing in innovation labs and training programs [2][3] - Joint development centers will be established to serve as testbeds for advanced technologies, facilitating proof-of-concept tests to accelerate the time-to-market for innovative enterprise tools [3][4] Group 2: Leadership Statements - Dr. Lisa Su, Chair and CEO of AMD, emphasized that the collaboration will provide businesses with leading-edge technology solutions to drive long-term growth by combining HCLTech's digital transformation expertise with AMD's advanced processors [4][5] - C Vijayakumar, CEO & Managing Director of HCLTech, highlighted the integration of AMD's silicon innovations with HCLTech's technology understanding to empower clients in making smarter technology investments [5] Group 3: Company Background - HCLTech employs over 223,000 people across 60 countries and reported consolidated revenues of $13.8 billion for the 12 months ending March 2025, focusing on various industries including Financial Services, Manufacturing, and Healthcare [7]