AMD Q2 2024 Earnings
Posted:
Strong AI Chip Demand Propels AMD Shares Up 7.5% Amid Supply Challenges
Advanced Micro Devices (AMD) for the second quarter reported revenue of $5.8 billion up by 9% YoY. The revenue growth was mainly driven by strong data center performance and solid results in the client business.
AMD reported that AI chip sales, included in its Data Center segment, surged 115% year over year to $2.8 billion, driven by a rise in AI GPU shipments.
AMD's primary business involves manufacturing central processors (CPUs) for laptops and servers. Sales for PCs are reported in the company's Client segment, which increased by 49% from the same period last year to $1.5 billion This growth indicates that the PC market is recovering after several years of post-pandemic decline.
However, that was four years ago, and consumers are now looking to replace the PCs they bought at the start of the pandemic. According to IDC, this has led to a 3% year-over-year increase in worldwide PC shipments in the second quarter, marking the second consecutive quarter of growth after eight quarters of declines.
AMD also manufactures chips for gaming consoles and GPUs for 3D graphics. It reported $648 million in revenue in the gaming category, a 59% YoYr decline.
The company’s embedded segment, consisting of products acquired through the Xilinx acquisition in 2022 for industrial customers, reported $861 million in sales, a 41% year-over-year decrease.
AMD CEO Lisa Su stated on a call with analysts that the company experienced “higher than expected” sales of its AI chips, with revenue from its MI300 chips surpassing $1 billion during the quarter.
“As a result, we now expect data center GPU revenue to exceed $4.5 billion in 2024, up from the $4 billion we projected in April,” Su said on the call.
The chipmaker reported a net income of $265 million, or 16 cents per share, compared to $27 million, or 2 cents per share, in the same period last year.
AMD plans to release new AI chips annually: the MI325X in the fourth quarter of this year, the MI350 in 2025, and the MI400 in 2026, as reiterated by the company on its earnings call. Su noted that the MI350 should be “very competitive” with Nvidia’s Blackwell, which was unveiled in March as “the world’s most powerful chip” for AI and recently began sampling to buyers.
Overall, AMD forecasted revenue of $6.7 billion, with a margin of error of plus or minus $300 million. On an adjusted basis, the company forecasted a gross margin of approximately 53.5% for the third quarter, slightly below the estimates of 53.6%.
On July 30th, AMD shares increased by 8% in extended trading.
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