AMD reported Q3 earnings in line with expectations, strong data center sales, but lower forecast
From CNBC: 2024-10-29 17:32:41
AMD CEO Lisa Su delivered the opening speech at the COMPUTEX forum in Taipei, Taiwan on June 3, 2024. The company reported third-quarter results that matched earnings forecasts and slightly exceeded revenue expectations. Earnings per share totaled 92 cents adjusted, while revenue reached $6.82 billion, outperforming the expected $6.71 billion.
AMD’s data center business doubled in sales for the second consecutive quarter, contributing to the overall revenue guidance for the fourth quarter, which aligned with consensus expectations. Despite this, AMD shares fell 7% in extended trading on Tuesday. The company projected $7.5 billion in sales for the current quarter, indicating a 22% year-over-year decline for the December quarter.
The chipmaker reported a net income of $771 million, or 47 cents per share, an increase from $299 million, or 18 cents per share, the previous year. AMD shares have increased by 20% in 2024, although competitors like Nvidia and Broadcom have seen greater gains due to the rising demand for AI chips. AMD is the second-largest data center GPU vendor.
In October, AMD announced a new AI chip called the MI235X, anticipating the AI GPU market to reach $500 billion by 2028. The company expects $5 billion in AI chip sales this year, up from the initial forecast of $4.5 billion. CEO Lisa Su stated that customer and partner interest in the MI325X chip is high, with production shipments set to begin this quarter.
AMD’s AI chips are included in its data center segment, which saw sales double annually to $3.5 billion. This growth was largely driven by strong Instinct-branded GPU sales for AI. Data center revenue surged by 122% year over year, with cloud providers and other companies showing significant interest in building AI infrastructure. Su emphasized continued demand in this sector.
The company’s gross margin expanded to 54%, attributed to higher data center revenue. AMD also produces central processing chips for laptops and servers. PC sales, reported in the client segment, grew by 23% to $1.9 billion during the quarter. AMD’s chips were featured in high-end laptops marketed by Microsoft as “Copilot+” machines capable of running advanced AI on Windows.
AMD also manufactures chips for gaming consoles and PCs. The gaming category experienced a 68% decrease in sales year over year, attributed to a decline in “semi-custom revenue,” including custom chips for game consoles like the Sony PlayStation 5. The embedded business, which offers lower-cost chips for industry applications, saw a 25% annual decline to $927 million in sales.
Read more at CNBC:: AMD earnings report Q3 2024