july 31, 2024

Advanced Micro Devices, Inc. (NASDAQ: AMD) reported its Q2 2024 earnings on July 30, 2024, showcasing strong performance across its key segments, with results that exceeded expectations.

Key Financial Metrics:

• Q2 2024 Revenue: $5.8 billion (Estimate: $5.73 billion)
• Q2 2024 EPS: $0.69 (Estimate: $0.678)

Segment Performance

1. Data Center:
   • Revenue: $2.8 billion (Growth: 115% year-over-year)
   • Key Drivers: The significant increase was driven by strong sales of the Instinct MI300 GPUs and a robust double-digit percentage increase in EPYC CPU sales. Data center products accounted for nearly 50% of overall sales in the quarter.
2. Client:
   • Revenue: $1.5 billion (Growth: 49% year-over-year)
   • Key Drivers: Growth was primarily driven by strong demand for Ryzen processors, including initial shipments of the next-generation Zen 5 processors.
3. Gaming:
   • Revenue: $648 million (Decline: 59% year-over-year)
   • Key Drivers: The decline was attributed to lower semi-custom SoC sales as the console cycle matures, although there was improved sales of Radeon GPUs.
4. Embedded:
   • Revenue: $861 million (Decline: 41% year-over-year)
   • Key Drivers: The decline was due to customers normalizing inventory levels, but there are early signs of recovery expected in the second half of the year.

Comparison with Expectations

• Overall Revenue: AMD reported $5.8 billion, exceeding the expected $5.73 billion.
• EPS: The reported EPS of $0.69 surpassed the expected $0.678.
• Segment Performance: The data center and client segments performed significantly better than expected, while gaming and embedded segments faced declines.

Outlook by Segment

1. Data Center:
   • Outlook: AMD expects continued strong growth in the data center segment, with revenue projected to exceed $4.5 billion for the full year, up from previous guidance of $4 billion. The company anticipates further adoption of EPYC processors and MI300 GPUs.
2. Client:
   • Outlook: The client segment is expected to continue benefiting from the launch of Zen 5 processors, with strong demand anticipated in the second half of the year.
3. Gaming:
   • Outlook: The gaming segment is expected to remain soft in the second half of the year due to ongoing inventory digestion and lower demand.
4. Embedded:
   • Outlook: The embedded segment is projected to gradually recover in the second half of the year, with design win momentum building.

CEO Comments on AI

CEO Lisa Su emphasized the importance of AI in AMD’s strategy:

• AI Revenue: The data center GPU revenue from MI300 exceeded $1 billion for the first time in Q2 2024.
• Customer Adoption: Major customers like Microsoft expanded their use of MI300X accelerators for AI applications, including GPT-4 Turbo.
• Future Growth: AMD expects the data center GPU revenue to exceed $4.5 billion in 2024, reflecting strong demand for AI solutions.

Conclusion

AMD’s Q2 2024 earnings report highlights strong performance, particularly in the data center and client segments, with revenue and EPS exceeding expectations. The positive outlook for the data center segment, driven by AI adoption, positions AMD well for future growth.