[News] AMD Raises Full-year AI Chip Sales Projection to USD 5 Billion though Q4 Forecast Fails to Impress

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AMD posted third-quarter results on October 29th, with a quarterly revenue of USD 6.8 billion and net income to USD 771 million, while data center revenue surged 122% year-over-year. With new products such as MI300X hitting the market, the world’s second largest data center GPU provider also raises its AI chip sales forecast for this year to USD 5 billion, up from an earlier estimate of USD 4.5 billion, according to a report by CNBC.

For the fourth quarter of 2024, according to the company’s press release, AMD expects revenue to be approximately USD 7.5 billion, plus or minus USD 300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 22% and sequential growth of approximately 10%. Non-GAAP gross margin is expected to be approximately 54%.

Fourth Quarter Forecast Falls to Impress; Concerns Raised on Capacity Constraints

However, the fourth-quarter forecast is slightly below market expectations, which raises concerns about whether the growth of the AI sector might be slowing down. According to Bloomberg, analysts had an average estimate of USD 7.55 billion.

AMD CEO Lisa Su reiterated that the company still sees robust momentum in AI, as interest from customers and partners in the MI325X is strong, a report by CNBC notes. AMD plans to begin production shipments of the MI325X this quarter, according to Su.

In October, AMD introduced the MI325X, and projected that the AI GPU market could reach USD 500 billion by 2028.

Nonetheless, Su also said that the environment will “continue to be tight”, but AMD has also planned for significant growth going into 2025, according to Bloomberg. She stated that the company feels good “about our overall supply-chain capability,” Bloomberg indicates.

AMD’s major foundry partner, TSMC, indicated in July that constraints on AI chip production will persist into 2025, which may imply a significant hurdle for clients like AMD, as it not only has to compete with NVIDIA on product performance, but also on the race of securing capacity.

Strong Data Center Revenue with 122% YoY Increase, while Gaming/ Embedded on the Decline

For the third quarter of 2024, AMD delivered a quarterly revenue of USD 6.8 billion, gross margin of 50%, operating income of USD 724 million, net income of USD 771 million and diluted earnings per share of USD 0.47. On a non-GAAP basis, gross margin was 54%, operating income was USD 1.7 billion, net income was USD 1.5 billion and diluted earnings per share was USD 0.92.

AMD’s AI chips are included in its data center segment, which saw annual sales more than double, reaching USD 3.5 billion. Overall, data center revenue rose 122% year-over-year. Su attributed the strong results to higher sales of EPYC and Instinct data center products and robust demand for the Ryzen PC processors, according to AMD’s press release.

The company also sees robust growth in its client segment, as revenue was USD 1.9 billion, up 29% year-over-year and 26% sequentially primarily driven by strong demand for “Zen 5” AMD Ryzen processors.

However, the gaming segment revenue was USD 462 million, down 69% year-over-year and 29% sequentially primarily due to a decrease in semi-custom revenue. According to CNBC, this could be attributed to reduced “semi-custom revenue” from custom chips used in consoles like the Sony PlayStation 5.

Embedded segment revenue was also declining, down 25% year-over-year to USD 927 million, as customers normalized their inventory levels. On a sequential basis, revenue increased 8% as demand improved in several end markets.

Read more

• [News] AMD Unveils its Latest AI Accelerators MI325X and MI355X, with TSMC Emerges as the Major Beneficiary
• [News] Intel Shifts to TSMC for Chip Production: A Looming Threat for AMD?

(Photo credit: AMD)