Raising the price of in-demand processors really helps the bottom line, says AMD AMD, which is raking in cash from its CPUs and GPUs, said higher price tags on its components helped bolster its financial results for the third quarter of this year. Its CPU and GPU average selling prices were higher compared to the previous quarter and year, which helped grow revenue. This increase was "driven by a richer …
It'll be interesting to see if AMDs prices go up until they're about as expensive as Intel if they can maintain the lead in performance for a couple of years. Seems like one of the main arguments you always hear for picking AMD is that they're cheaper than intel for roughly the same performance.
In fact, AMD is cheaper than Intel and you get far more performance. AMD have entire segments in which Intel have literally no competitive offering at all (go ahead, we'll wait while you scrounge their SKU stack for a 64-core part). You also, almost always, get more performance for less power, especially when Intel's PCH is factored in -- EPYC SoCs don't require an external PCH or anything analogous to it; the analogous logic is fully integrated and its power dissipation included in the published TDP figures. And at least when it comes to the EPYC line, AMD's obsolete generation (Rome) is still superior in absolute performance, core count, and cache size to anything Intel have on offer.
AMD have obviously figured that out and decided to raise their prices across the board. So you'll still get better performance and spend less on energy, but the raw price delta has been cut. For the moment, where Intel have comparable products at all, AMD's are still less expensive. I agree with you that this gap will continue to be closed over time, probably with further AMD increases rather than Intel price cuts as Intel have pretty clearly decided they've cut prices as far as they're going to and are going to ride an industry-wide supply crunch as long as they can. The big wildcard over the next 12-18 months is going to be AMD supply: right now you still can't walk into the corner shop and buy a Milan processor at any price; you're very lucky if you can find a heavily marked up Rome. If AMD can meet demand at their current prices, Intel will struggle to move their frankly uncompetitive processors. Right now the only reason anyone buys Intel at all -- other than people who are being paid to do so -- is that they can't get the AMD parts they want. In the client market, Intel seem hopeful that they can convince people to want Alder Lake, but that's still very much in question and they have no answer for servers until at least Sapphire Rapids, if and when they manage to ship that. Until that DDR5 transition begins (no one's in a hurry given the eye-watering prices and near-total unavailability), the ball remains very firmly in AMD's court. They have got to alleviate their supply problems and make hay while the sun shines. You're seeing that with these price increases, but really they could sell twice as many as they're currently making and they simply must fix that. Enormous technology and performance leads like this do not come along often and they must be translated into profits in hand. Whether Intel ever recover is very much in doubt but Ampere and a host of other ARM (and eventually RISC-V) suppliers are waiting in the wings to offer AMD a very stiff challenge among customers who are not wedded to an ISA.
"AMD is paying out $0.75 per share for the quarter..."
AMD stock does not pay out anything. Although the company has been in business continuously for more than 50 years, I was not able to find any evidence that it has ever paid any dividends at all, it definitely has not done so since at least 1997, and the stock does not pay one currently.
The $0.75 figure is earnings per share, which is the amount of money you are notionally entitled to as a shareholder from the profits of the business. Whether you will ever see it depends upon the board's dividend policy (which seems obvious in this instance) as well as the future of the business. Usually even companies that do pay dividends never pay more than a modest fraction of the profits to shareholders before squandering the rest on bad acquisitions, failed turnaround plans, executive bonuses and stock buyback schemes, and ultimately on debt obligations that lead to bankruptcy and the cancellation of all shares. Given AMD's history, the likelihood that you the shareholder will ever receive a dividend has to be pretty close to zero, which means that's also the true value of the share regardless of how much you like the business or the technology (and astute readers will know that I do like the technology and their industry leadership quite a bit).
Whether shareholders will be happy with the EPS figure is a bit speculative. Certainly I would be happy to own shares in a company generating that kind of profit if I were also receiving a quarterly dividend of, say, 30 cents a share, but how much would I pay for such a share? Probably no more than about $40, and if it were a company with AMD's horrific track record of brief intervals of technical brilliance interleaved with long stretches of gross mismanagement and technical incompetence leading to repeated brushes with corporate death, I'm pretty sure I would not be interested in it even if the price were as low as $30. If I were someone who has recently paid well over $100, I would not be at all satisfied with EPS of $0.75. At that kind of price and given both the high risk of total loss at some time in the next 20 years and the potential for continued double-digit profit growth over the next several years, I would expect quarterly EPS of at least $2 a share and a quarterly dividend of at least 80 cents. But that's just me: I'm a very unusual investor in that I expect to be receive a return when I take risks. Most people who buy stocks today are not investors at all but "momentum traders" whose strategy is to buy what everyone else has been buying and hope that continues forever. I'm sure the current shareholders who've never thought about how long it will take them to recover their initial investment, are unfamiliar with AMD's (recent!) history, and have never heard of discounted present value are quite happy with this report, because it means the quoted market price of their worthless holdings will go up and they'll feel wealthier. But even if the rosiest possible scenario plays out for AMD from here, there's little chance that anyone paying $124 for a share will ever get a significant fraction of it back, and the best chance of getting anything at all is probably for the company to be acquired for $2 a share many years from now after the inevitable series of technical blunders (however much you trust Ms. Su, there doesn't seem to be much in the way of a succession plan) and the decline of x86 into irrelevance leave the company a heavily indebted shell with a few useful patents someone else will pick up for a song.
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