AMD reported strong earnings, stock fell due to slower AI chip growth, but remains optimistic

From CNBC: 2024-10-29 20:26:17

Advanced Micro Devices reported a strong third-quarter with revenue of $6.82 billion, up 18% year over year, and adjusted EPS of 92 cents. The stock fell over 7% in extended trading due to slower growth in AI chip business. Despite this, AMD remains optimistic about its long-term prospects and raised full-year sales projections to exceed $5 billion. The company’s MI300 AI chip is expected to drive significant growth in the AI market, which is projected to reach $500 billion by 2028. CEO Lisa Su highlighted plans for next-generation AI products and expanding customer relationships in 2025. AMD’s data center segment, driven by AI chip shipments, reported substantial growth. Sales to cloud, OEMs, and AI companies contributed to the segment’s $3.55 billion revenue, more than double from last year. AMD’s client segment also performed well, generating $1.88 billion revenue, driven by strong demand for Zen 5 Ryzen processors. The company expects the PC market to grow in mid-single digits in 2025, fueled by AI-infused PCs and business refresh cycles. Gaming unit revenues were lower than expected, but the impact on overall performance is minimal. Embedded segment, including Xilinx, showed signs of gradual recovery with $927 million revenue. AMD expects fourth-quarter revenue of $7.5 billion, with growth across data center, client, and gaming segments. Adjusted gross margins are expected to be 54%, slightly above Wall Street expectations. The company is upbeat about AI chip sales in 2024, surpassing $5 billion. Jim Cramer’s Charitable Trust is long on AMD.



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