Will AMD Achieve Its Gross Margin Target in 2018?

On its 2017 investor day, AMD stated that it would expand its non-GAAP (generally accepted accounting principles) gross margin from 31% in 2016 to ~36% in 2018. It improved its gross margin to 34% in 2017 by increasing its ASP (average selling price) and reducing its production costs through the ramp-up of its 14 nm (nanometer) node. AMD’s gross margin expansion of three percentage points in one year was higher than NVIDIA’s (NVDA) an Intel’s (INTC) gross margin expansions of one percentage point and 0.6 percentage points, respectively.