AMD reported record revenue in Q4 2024 driven by data center segment growth
From Nasdaq: 2025-02-05 00:30:34
Advanced Micro Devices (AMD) reported record revenue in Q4 2024, with a 24% increase to $7.7 billion. The data center segment saw a 69% revenue increase, driven by EPYC processor adoption in cloud, enterprise, and supercomputing. AMD’s server business gained market share, with EPYC Turin processors leading the way.
In 2024, AMD saw significant growth in data center AI, server, and PC market share. The data center segment contributed roughly 50% of annual revenue, with a 69% increase to $3.9 billion in Q4 alone. EPYC CPU sales grew double digits, with strong demand from hyperscale and enterprise customers.
AMD’s EPYC processors are gaining momentum in the cloud and enterprise markets. EPYC Turin processors set performance records and have over 540 records across benchmarks. With more than 450 EPYC platforms available from leading OEMs and ODMs, AMD is well-positioned for growth in 2025 across cloud and enterprise markets. In 2024, AMD experienced exceptional growth in their data center AI business, generating over $5 billion in revenue. Key partnerships with industry leaders like Meta and Microsoft have expanded the use of AMD Instinct accelerators. IBM plans to integrate MI300X into their Watson X AI platform, while Dell is offering MI300X in their AI factory solution suite.
The fourth quarter saw increased production deployments of MI300X with major cloud partners, including Meta and Microsoft. IBM plans to integrate MI300X into their Watson X AI platform, and Dell is offering MI300X in their AI factory solution suite. AMD Instinct platforms are being adopted by more than a dozen CSPs globally.
HPC adoption of AMD’s Instinct platforms grew significantly, with AMD now powering five of the world’s 10 fastest supercomputers. The El Capitan system at Lawrence Livermore National Labs debuted as the world’s fastest supercomputer, using over 44,000 MI300 AI APUs. The University of Stuttgart also launched the Hunter supercomputer using MI300A for advanced AI projects.
AMD continues to invest in software enhancements for their Instinct platforms, with ROCm 6.3 optimizations improving inferencing performance by 2.7 times. The upcoming MI350 series, featuring CDNA 4 architecture, promises a 35 times increase in AI compute performance compared to CDNA 3. The MI400 series is also in development and expected to launch in 2026.
AMD’s acquisition of ZTE Systems has progressed well, with regulatory approvals received in key jurisdictions. Cloud and OEM customers have responded positively to the acquisition, as ZTE’s expertise can accelerate future Instinct accelerator platforms. Divestment of ZTE’s U.S.-based data center infrastructure production capabilities is expected in the first half of the year. In the client segment, revenue increased 58% year over year to a record $2.3 billion, driven by higher demand for Ryzen desktop and mobile processors. Ryzen CPUs dominated best-selling lists globally, with over 70% share at major retailers. A strategic collaboration with Dell will see a full portfolio of commercial PCs powered by Ryzen Pro processors. Looking ahead, AMD plans to grow client segment revenue well ahead of the market.
The gaming segment saw revenue decline 59% year over year to $563 million due to expected declines in semi-custom sales. However, cumulative unit shipments surpassed $100 million in the fourth quarter. Channel inventories have normalized, and semi-custom sales are expected to return to historical patterns in 2025. In gaming graphics, revenue declined as AMD prepares to launch next-gen Radeon 9000 series GPUs with RDNA 4 architecture.
In the embedded segment, fourth-quarter revenue decreased 13% year over year to $923 million, with mixed demand across markets. AMD expanded its adaptive computing portfolio with solutions for key markets, including the Versal RF series for aerospace and defense. The company closed a record $14 billion of design wins in 2024, positioning them for ongoing share gains. The momentum from 2024 sets AMD up for strong growth in 2025 across data center, client, gaming, and embedded businesses.
Looking forward to 2025, AMD expects a strengthening demand environment across all businesses with strong growth in data center and client segments and modest increases in gaming and embedded segments. The rapid pace of AI innovation presents significant growth opportunities for AMD, with investments in AI infrastructure and advancements in AI models driving increased compute capacity. AMD’s end-to-end AI product offerings position them for long-term growth, with the potential to generate tens of billions of dollars in annual revenue from data center AI over the coming years. In the fourth quarter of 2024, revenue for the company was a record $7.7 billion, with a 24% year-over-year growth. Operating income was a record $2 billion, reflecting a 26% operating margin. The data center segment saw revenue of $3.9 billion, up 69% year over year, while the client segment revenue was $2.3 billion, up 58% year over year.
The company generated $1.3 billion in cash from operations and a record $1.1 billion in free cash flow during the quarter. Inventory increased to $5.7 billion, with cash, cash equivalents, and short-term investments at $5.1 billion. They also repurchased 1.8 million shares and returned $256 million to shareholders in the fourth quarter.
For the first quarter of fiscal year 2025, the company expects revenue to be approximately $7.1 billion, up 30% year over year. They plan to combine the client and gaming segments into one reportable segment and continue providing distinct revenue disclosures for data center, client, gaming, and embedded businesses. Non-GAAP gross margin is expected to be approximately 54%.
CEO Lisa Su expressed satisfaction with the company’s performance in 2024 and highlighted progress in hardware and software roadmaps for 2025. The team executed well in the data center GPU business, with plans for continued growth in revenue and advancements in product cycles for the upcoming year. AMD has launched the MI325 hardware and plans to deploy new designs on MI300 and MI325 in the first half of the year. The MI350 series will be launched earlier than expected due to strong customer demand, boosting competitiveness. Data center business is expected to grow strong double digits in 2024 and 2025.
In Q1, AMD expects a 7% sequential decline, with data center, client, and embedded businesses down more than the corporate average due to seasonality. Gaming business is expected to decline less than the corporate average. AMD remains confident in driving growth in the server CPU business.
Data center GPU business performed well in Q4, with servers outperforming GPUs but still consistent with expectations. AMD expects the data center segment in the first half of 2025 to be similar to the second half of 2024, for both servers and data center GPUs.
AMD has not set a specific forecast for the data center GPU business this year, unlike last year. Despite not setting specific forecasts, AMD remains confident in the growth potential of the data center GPU business. The company’s long-term 60% CAGR goal remains a target for future growth. Lisa Su, CEO of AMD, predicts the company’s AI compute business will grow to tens of billions by 2025. Recent data points show strong demand, with a data center accelerator TAM expected to reach $500 billion by 2028. Su remains bullish on long-term growth, emphasizing the importance of innovation and open-source models in the AI industry.
Su believes that DeepSeek’s recent announcements highlight the rapid pace of innovation in AI. She sees the development of new training and inference capabilities as positive for AI adoption, emphasizing the importance of having the right compute for different workloads, including CPUs, GPUs, ASICs, and FPGAs. Su remains optimistic about AI’s future growth and expects more innovation in the industry.
AMD’s roadmap includes CPUs, GPUs, and ASICs to address a variety of AI workloads. The company has seen positive developments in its data center GPU business, with new important AI design wins expected to be deployed in the first half of 2025. The pull-in of the MI350 series to midyear is seen as an incremental positive, indicating increased optimism for the 2025 data center GPU ramp. Lisa T. Su, President and CEO of AMD, discusses strong Q4 performance in client business due to new products and high demand for gaming CPUs. Desktop and notebook sales were robust, with no significant inventory buildup. Expectations are bullish for client growth in 2025, especially in desktops.
In Q4, AMD saw double-digit sequential growth in server CPU business, driven by cloud and enterprise segments. Enterprise sales are gaining traction, with increased go-to-market investments paying off. Strong portfolio competitiveness across price points and workloads expected to drive server CPU growth in 2025.
AMD’s focus on networking in AI infrastructure is highlighted, with investments in Ethernet technology and UltraNET Ethernet Consortium. Increased proof points and performance metrics in networking solutions from MI300 to MI400 are driving customer adoption. Continued innovation in networking architecture expected in the upcoming year. AMD is developing an in-house AI NIC along with third-party networking solutions. The company is deploying full rack solutions at both MI350 and MI400 levels, emphasizing the importance of system-level scaling. Lisa Su highlights the growth in data center GPU business, expecting new deployments despite a product transition phase.
The focus remains on introducing new products and meeting customer demands for training solutions in addition to inference. AMD is making progress with software investments in training libraries and ramping up GPU deployments in data centers. The company emphasizes the importance of ASICs as part of their solution toolbox, offering custom solutions for customers.
AMD’s data center segment saw double-digit growth sequentially in Q4. The data center GPU business saw slightly less growth than the server segment. Lisa Su clarifies that the data center GPU number for Q3 may need adjustments. The company expects the GPUs to remain relatively flat in the first half of 2025, with deployment timing impacting growth rates.
Lisa Su confirms that AMD expects higher exit rates for GPUs in 2025 compared to 2024. The company is committed to this growth trajectory, despite potential fluctuations based on deployment timings. The focus remains on meeting customer demands and enhancing the data center GPU business. AMD CEO Lisa Su discussed the server CPU business, predicting a strong market in 2025. She emphasized the importance of having the right product for various workloads, aiming to grow share in cloud and enterprise. CFO Jean Hu mentioned a 54% gross margin in Q1, expecting an increase in the second half due to data center growth. 1. The government announced a new stimulus package worth $1 trillion to provide financial relief to businesses and individuals affected by the pandemic. The package includes direct payments to Americans, funding for small businesses, and support for healthcare workers.
2. A new study revealed that the unemployment rate has reached a record high of 14% as a result of the economic downturn caused by the pandemic. The study also showed that job losses were most severe in the hospitality and retail sectors.
3. The stock market saw a significant increase today, with the Dow Jones Industrial Average rising by 500 points. Investors are optimistic about the potential impact of the new stimulus package on the economy and are hopeful for a swift recovery.
4. The World Health Organization announced that a new variant of the coronavirus has been identified in several countries. The variant, known as B.1.1.7, is believed to be more contagious than previous strains and could potentially impact the effectiveness of vaccines.
5. In international news, tensions have escalated between two neighboring countries over a disputed border region. Both sides have deployed troops to the area, raising concerns about the potential for a military conflict. Diplomatic efforts are underway to de-escalate the situation and prevent further violence.
Read more at Nasdaq: Advanced Micro Devices (AMD) Q4 2024 Earnings Call Transcript