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AMD Powers AWS Instances With Second-Gen EPYC Processors

Advanced Micro Devices, Inc. AMD recently announced that the second-gen AMD EPYC processors have been selected by Amazon’s AMZN cloud division, Amazon Web Services (AWS), to provide more processing power to its customers.

Notably, AWS’ Amazon Elastic Compute Cloud (EC2) C5a instances leverage the second-gen EPYC processor’s high core count to deliver optimal performance to customers that will help them handle compute intensive workloads like distributed analytics, web applications and video game development.

The second-gen AMD EPYC family features multiple variants with core counts ranging from 8 to 64 cores. The processors also have a high base frequency range of 3.2 GHz to 3.9 GHz. These robust features combined with their low price point are driving demand for the processors.

Moreover, Amazon EC2 C5a instances, powered by EPYC processors, running at frequencies up to 3.3 Ghz, are available in eight configurations with up to 96 virtual CPUs. The C5a instance is also the sixth instance family at AWS to be powered by AMD EPYC processors.

The EC2 C5a instances are currently available in the AWS U.S. East, AWS U.S. West, AWS Europe, and AWS Asia-Pacific regions. Disk variants like EC2 C5ad, EC2 C5an.metal and EC2 C5adn.metal are expected to be available soon.

This increasing usage of second-gen EPYC processors by AWS is expected to boost AMD’s revenues in the upcoming days and boost investors’ confidence in the company’s stock.

Notably, shares of AMD have returned 14.8% in the year-to-date period compared with the industry’s rise of 2.1%.

Advanced Micro Devices, Inc. Price and Consensus

Ongoing Momentum of EPYC Processors Bode Well

AMD has been witnessing solid traction for its second-gen EPYC server processors in recent times. Markedly, the processors have enjoyed strong popularity among the tech industry’s top players like IBM, Microsoft MSFT and Hewlett Packard Enterprise HPE.

Recently, HPE selected second-gen EPYC processors to power its SimpliVity 325 Gen 10 HCI solution. The solution doubles the number of cloud-based virtual desktops supported per server from 300 to 600, which provides organizations with a 50% lower cost per remote worker.

In April, IBM Cloud adopted the second-gen EPYC 7642 processor to support its latest bare metal servers to accelerate complex workloads like data analytics, electronic design automation and AI.

Microsoft’s cloud computing platform — Azure — has also selected AMD’s second-gen EPYC processors to power its Azure NVv4 virtual machines (VMs). This will enable Azure to provide customers with a cloud-based virtual desktop capable of handling HPC workloads.

These major deal wins highlight strength in AMD’s second-gen EPYC processors and are expected to drive the company’s top-line growth in the quarters ahead.

Moreover, this trend is likely to continue, driven by rapid growth in the cloud computing market, which is expected to witness a CAGR of 14.9% by between 2020 and 2027, per Grand View Research data. Markedly, the coronavirus-induced work-from-home wave and increased use of online schooling solutions is driving demand for cloud computing solutions, which adds on to the positives.

Persistent Risks

AMD, which currently carries a Zack Rank #4 (Sell), is likely to be negatively impacted by COVID-19 induced supply-chain constraints and broader macroeconomic weakness prevailing in the market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Also, increasing expenses on product development are expected to limit margin expansion. Further, stiff competition from Intel is likely to lead to pricing pressure and dampen profitability in the near term. In March, Intel launched the second-gen Intel Xeon Gold 6256 and Gold 6250 to strengthen its enterprise CPU portfolio.

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