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Will Solid GPU Demand Aid Advanced Micro (AMD) Q1 Earnings?

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Advanced Micro Devices, Inc. (AMD - Free Report) is set to report first-quarter 2018 results on Apr 25. Robust performance of the company’s GPU products recorded under its Computing and Graphics segment are expected to drive results.  

The wide use of artificial intelligence (AI) techniques and machine learning tools in industries like gaming, automotive and blockchain has been driving demand for GPUs.

Notably, the company’s release of Vega-based GPUs and increasing demand for its Polaris products in both gaming and blockchain industries led to improved revenues in the last quarter. Operating income for Computing and Graphics segment was $85 million in fourth-quarter 2017, primarily driven by higher revenues, against a loss of $21 million in fourth-quarter 2016.

Launched in the fourth quarter, Radeon RX Vega family of GPUs aimed at gaming enthusiasts has performed better than previous Radeon GPUs.

Adding to the positives, Apple (AAPL - Free Report) also launched the new iMac Pro, powered by AMD’s Radeon Pro Vega product. The company’s GPU clientele also includes Amazon (AMZN - Free Report) and Baidu (BIDU - Free Report) .

However, a decline in cryptocurrency mining demand might adversely impact the GPU market and thereby the company’s top line. Additionally, intensifying competition in the traditional PC market as well as the GPU segment and customer concentration remain concerns.

The Zacks Consensus Estimate for Computing and Graphics segment revenues is currently pegged at $1000 million for the first quarter. This segment is anticipated to boost total revenues in the soon-to-be reported quarter.

Advanced Micro has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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