AMD's Q2 Earnings: AI Chip Sector Gains and Data Center Growth Boost Optimism

Analysts reboot AMD stock price target after earnings

In 1962 the Avis car-rental company made advertising history. At the time, Avis (CAR) was the second-largest vehicle rental company in the U.S. behind Hertz. Related: Analyst tweaks AMD stock price target ahead of Q2 earnings Rather than gloss over their runner-up status, Avis pulled a U-turn and came up with a slogan that proudly celebrated its place in the lineup: "We're number two," the tagline stated. "We try harder." The ad campaign took off and within a year Avis went from losing $3.2 million to earning $1.2 million, according to Slate, the first time it had been profitable in more than a decade. The market-share gap between the two companies began to shrink, and the worried Hertz executives projected that by 1968 Avis might need a new ad campaign -- because it would no longer be No. 2. Advanced Micro Devices (AMD) knows a thing or two about being No, 2, seeing as how it is the second largest vendor of data-center graphics processing units after AI chip kingpin Nvidia (NVDA) . AMD CEO sees 'great progress across the board' AMD has been struggling to capture market share from its rival with its new MI300X offering. On July 30 AMD reported second-quarter earnings, and the chipmaker beat Wall Street's expectations. Related: Analysts revamp AMD stock price target on AI deal Chief Executive Lisa Su said revenue came in above the midpoint of guidance and profitability increased by a double-digit percentage due to higher-than-expected sales of the company's Instinct, Ryzen and EPYC processors. Data-center-segment revenue more than doubled (up 115%) year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a double-digit percentage increase in EPYC central-processing-unit sales. "As we look into the second half of the year, I think we would expect that MI300 revenue would continue to ramp in the third quarter and the fourth quarter," Su told analysts during the company's earnings call. AMD posted earnings 69 cents a share, up from 58 cents a year earlier and ahead of Wall Street's forecast for 68 cents a share. Revenue totaled $5.84 billion, an increase from the year-ago tally of $5.36 billion and beating analysts' consensus estimate of $5.72 billion. Looking ahead, AMD said it expected about $6.7 billion of revenue in the current quarter, versus Wall Street expectations of 93 cents in earnings per share on $6.61 billion of revenue. "When we started the year, I think the key point for us was to get our products into our customers' data centers, to have them qualify their workloads, to really ramp in production, and then see what the production capabilities are, especially performance and all of those things," Su said. "And I can say now, being sort of more than halfway through the year, we've seen great progress across the board," she added. TheStreet Pro analyst: AMD balance sheet 'a work of art' TheStreet Pro's Stephen Guilfoyle noted in his recent column that "there are parts of AMD that are struggling, but the company is hitting home runs precisely where it needs to." "I think the data center numbers show that even with Nvidia in the driver's seat as far as supplying AI-driven demand for high-end GPUs, there will be more than enough secondary and tertiary demand for the likes of AMD to do very well for themselves," he said. "Oh, and the balance sheet is a work of art. NVDA should rally alongside AMD on this release," Guilfoyle added. More AI Stocks: Analysts reacted to AMD's earnings report by adjusting their stock price targets. Bank of America Securities lowered the firm's price target on AMD to $180 from $195 and affirmed a buy rating on the shares after the company delivered "a good quarter with modestly better outlook." The firm said AMD's MI300 AI product sales forecast was raised to $4.5 billion-plus from $4 billion-plus for calendar 2024. But operating expense is increasingly intense while gross margin is expanding only modestly, B of A said. It attributed its lower price target to a recent reduction in sector multiples. Truist lowered the firm's price target on AMD to $156 from $162 and affirmed a hold rating on the shares, according to The Fly. The second-quarter results topped estimates but third-quarter guidance was "mixed," the investment firm said. AMD's data-center and client end-market upsides will likely dominate sentiment, Truist said. The firm added, however, that its longer-term concerns remain, with the company's position in artificial intelligence likely "confined" relative to Nvidia's solutions and its X86 server market slowly coming under pressure from new CPU competitors. Morgan Stanley analyst Joseph Moore raised the firm's price target on AMD to $178 from $176 and maintained an equal-weight rating on the shares. Given the setup with computing strong but embedded weaker, Moore said, he didn't expect an upward revision and calls the company's better-than-expected third-quarter guidance "a surprise." The AI commentary was "quite optimistic" and the 2024 target was revised up to $4.5 billion from $4 billion, Moore said. The "good quarter, particularly in the context of the sharp selloff, should be a relief," the analyst added. Related: Veteran fund manager sees world of pain coming for stocks

AMD's Q2 Earnings: 9 Analysts Remain Positive On Long-Term Prospects, AI Optimism Tempered By Cost Concerns - Advanced Micro Devices (NASDAQ:AMD)

Analysts have mixed views with target price adjustments; there's optimism for AI-driven growth but concerns over gaming and rising costs. Advanced Micro Devices, Inc. AMD saw its shares surge in its stock price following its second-quarter earnings report, which exceeded expectations. The semiconductor giant reported earnings of $0.69 per share, surpassing the consensus estimate of $0.68, and sales of $5.835 billion, also ahead of the $5.724 billion forecast. Here's how analysts from top firms reacted to AMD's latest performance. BofA Securities: Cautious Optimism Amidst Rising Costs BofA Securities analyst Vivek Arya maintains a Buy rating but revises the price target down to $180 from $195. Arya praises AMD's performance, highlighting strong AI investments and recovery in PC/server markets. However, he notes rising operational expenses and only modest margin expansion as potential concerns. Arya expects AMD to grow its sales by 23% YoY in CY24 but warns that near-term consensus expectations might be overly optimistic given the rising cost profile. JPMorgan: Strong Data Center Growth Fuels Optimism JPMorgan analyst Harlan Sur keeps a Neutral rating with a $180 price target for AMD. Sur lauds AMD's impressive second-quarter performance, driven by a 21% sequential rise in data center revenues and better-than-expected PC client shipments. He notes AMD's increased CY24 data center GPU outlook to over $4.5 billion, citing improved supply chain dynamics. Sur anticipates continued growth in data center and PC segments but a decline in gaming revenue and modest growth in embedded. Read Also: Can AMD Stock Hit $180? AI Growth Fuels Data Center Dominance Over Intel Goldman Sachs: Data Center Growth Drives Future Prospects Goldman Sachs analyst Toshiya Hari keeps a Buy rating with a 12-month price target of $175. Hari views AMD's robust data center GPU traction and improving server CPU market share positively. While acknowledging potential near-term margin pressures due to increased AI investments, Hari is optimistic about AMD's growth trajectory, especially in data center GPUs and enterprise servers. He expects AMD to continue outperforming competitors like Intel Corp INTC and NVIDIA Corp NVDA. Cantor Fitzgerald: Adjusted Price Target Reflects Market Realities Cantor Fitzgerald analyst C.J. Muse lowers the price target to $180 from $200 but remains Overweight on the stock. Muse is encouraged by AMD's raised MI300 revenue outlook to over $4.5 billion and strong performance in server CPUs. He notes that while investor fears about MI300 demand may have been overstated, the company's gaming and embedded businesses are experiencing challenges. Muse expects AMD to benefit from robust server CPU and client CPU growth despite a more muted outlook for gaming. KeyBanc Capital Markets: Positive Outlook Driven by MI300 KeyBanc Capital Markets analyst John Vinh maintains an Overweight rating, bolstered by AMD's strong second-quarter results and raised MI300 revenue outlook. The price target is $220. Vinh highlights the continued growth in traditional server markets and above-seasonal PC demand driven by new product launches. While noting weaker projections for embedded and gaming segments, he is optimistic about AMD's overall performance and growth potential in the AI and server markets. Wedbush Securities: Bullish on AI and Market Position Wedbush Securities analyst Matt Bryson reiterates an Outperform rating with a price target of $200. Bryson is impressed by AMD's performance, particularly the strong growth in MI300 sales and the revised 2024 revenue outlook. He views AMD as a major contender in the AI GPU market, with potential to surpass expectations in 2025. Bryson remains positive about AMD's growth in server compute and PC sales, despite challenges from competitors. Oppenheimer: Cautious Amidst Market Pressures Oppenheimer analyst Rick Schafer maintains a Perform rating, citing AMD's mixed outlook and the potential dilution of its AI growth story by low-growth segments like PC and gaming. Schafer notes that while AMD's AI product ramp is impressive, ongoing challenges in gaming and embedded markets temper his optimism. He remains cautious about AMD's ability to sustain profitability in a competitive landscape. Truist Securities: Concerns Over Market Position Truist Securities analyst William Stein raises the price target to $156 but stays at a Hold rating. Stein acknowledges AMD's raised AI GPU guidance and solid data center growth but remains concerned about AMD's competitive positioning compared to Nvidia. He highlights potential pressures from new CPU competitors and maintains a cautious stance on AMD's long-term prospects. ROTH * MKM: Confident in AI Momentum ROTH * MKM analyst Suji Desilva continues with a Buy rating and a price target of $200. Desilva is encouraged by AMD's raised AI GPU revenue expectations and broadening traction in data center and client segments. Despite challenges in gaming and embedded markets, Desilva remains confident in AMD's ability to deliver strong growth and maintains a positive outlook on its AI and data center businesses. AMD's second-quarter earnings report has received a range of reactions from analysts, reflecting a mix of optimism about the company's AI and data center growth, tempered by concerns over rising costs and competitive pressures. Most analysts remain positive about AMD's long-term prospects, with some adjusting their price targets to reflect current market conditions and future expectations. Read Next: AMD CEO Lisa Su Says AI Is In Early Stages Of Multiyear 'Supercycle': 'There's Tremendous Need For More Compute' Photo: Shutterstock Market News and Data brought to you by Benzinga APIs

AMD steps up to rival Nvidia in the AI chip sector, with huge revenue gains sending its stock higher - SiliconANGLE

AMD steps up to rival Nvidia in the AI chip sector, with huge revenue gains sending its stock higher Advanced Micro Devices Inc. reported solid earnings and sales today and provided an upbeat revenue forecast for the coming quarter, pushing its stock higher in late-trading. The results suggest AMD is finally emerging as a serious rival to Nvidia Corp. in the artificial intelligence chip industry, with its growth powered by strong sales of its new MI300X AI chip. The company reported second quarter earnings before certain costs such as stock compensation of 69 cents per share, just ahead of Wall Street's target of 68 cents per share. Revenue for the period rose 8% to $5.84 billion, well ahead of the $5.72 billion expected by analysts. As for the coming quarter, AMD said it's looking for sales of around $6.7 billion, much more than the $6.61 billion target sought by Wall Street's analysts. AMD also boosted its bottom line, reporting net income for the period of $265 million, well up from the $27 million profit it delivered in the same period one year earlier. The company's stock gained almost 8% in the extended trading session, helping to reverse declines that had seen it fall 6% in the year to date. That happened even though AMD is the second-largest producer of graphics processing units in the world after Nvidia. GPUs are essential for most AI processing and training workloads, and rising sales of those chips have helped Nvidia's stock to more than double in value this year. Wall Street investors have been urging AMD to up its game in the GPU arena and take more market share away from Nvidia, which is believed to have a commanding lead in the AI industry, accounting for more than 80% of related chip sales. The company duly responded with the launch of its MI300X AI chip earlier this year, and it has helped drive strong growth in its data center business. Earlier this year, AMD said it's expecting to rake in around $4 billion in AI chip sales, which would represent around 15% of its expected revenue. In an update today, AMD Chief Executive Lisa Su (pictured) told analysts that the company saw "higher than expected" sales of the MI300X chips. Although she didn't provide an exact number, she said revenue from that product exceeded $1 billion during the quarter. "As a result, we now expect data center GPU revenue to exceed $4.5 billion in 2024, up from the $4 billion we guided in April," she said on a conference call with analysts. Su also fielded questions from analysts who raised concerns that the race to build out AI infrastructure is slowing down. She insisted that the company's customers still seem eager to buy as many AI chips as they can. "The overall view on AI investment is: We have to invest -- the potential of AI is so large," she told the analysts. "The investment cycle will continue to be strong." AMD's MI300X sales helped to boost a data center segment that saw revenue rise more than 115% to $2.8 billion, beating the Street's target of $2.75 billion. The company's traditional business has always been central processing units for personal computers, laptops and servers, and that also did well in the quarter. The client segment reported sales of $1.5 billion, up 49% from a year earlier and ahead of the Street's forecast of $1.43 billion. Su said the results show that the PC market is recovering from its post-COVID-19 pandemic slump. AMD's third business segment involves chips for video games consoles and GPUs for 3D graphics, and it delivered $648 million in sales, down 59% from a year earlier and below the Street's target of $676 million. Last is the company's embedded segment, which primarily consists of networking chips. It delivered $861 million in sales, down 41% from a year ago, but still ahead of the $856 million target. The company's report is the first in a busy week of earnings updates from top chipmakers, with Intel Corp., Qualcomm Inc. and Arm Holdings Plc all set to follow with their own results later this week. The results bode well for a chip industry that has recently lost the enthusiasm of investors, who are concerned that AI spending is losing its momentum. The Philadelphia Stock Exchange Semiconductor Index, which is a closely watched benchmark of chipmaker stocks, was down 11% this month, prior to today's report.

AMD Q2 Analysis: With Data Centers Dominating, It's Ever Closer To Nvidia (NASDAQ:AMD)

Despite mixed trends in different segments, AMD's strategic moves in AI and hardware solutions position it well for future growth. However, the value propositions of AI adoption merit a better definition. Over the past few years, Advanced Micro Devices, Inc. (NASDAQ:AMD) has always been a beat or two behind its ostensible cousin Nvidia (NVDA) (with their respective founders being literal cousins). AMD's latest earnings release for Q2 2024 posted modest gains against analysts' consensus expectations by posting revenues of $5.84 billion for the quarter versus an expectation of $5.72 billion and with earnings per share (EPS) of 69 cents (adjusted) versus an expectation of 68 cents. The modest gain over expectations indicates that the company's growth was largely predictable and well in line with its ongoing transformation to becoming yet another Nvidia. As early as 2021, AMD was driven by being both a long-standing default choice of processor for many a computer manufacturer client as well the budget-minded gamer. In the year so far, those days are increasingly in the company's rearview mirror: As expected, revenues from data centers now contribute to a little under half of net revenue. The client segment, which used to bring in half the revenue, now accounts for a quarter, while the contribution from gaming has halved to under 15%. Data centers tend to be stable clients with high retention potential after an initial buy-in. Thus, like with Nvidia, AMD is now closer to the "corporate" than the "individual customer." This transformation has been a while in the making; the company reordered its business into the aforementioned segments from Fiscal Year (FY) 2021 onwards. Overall, line item trends are mixed but with one clear theme: From 2020 onwards, the company has been ratcheting up research and development (R&D) expenditure in a bid to close the gap with its rival and capture more corporate interest. In the first half (H1) of the year, cost of sales seems to be trending relative to previous year, which was also lower relative to previous year. After two full years of income decline, the current year seems to be the moment when the company is poised to claw back higher profitability. Higher expenses, however, also mean that the EPS doesn't look like it will attract the highs last seen in 2021. After an encouraging growth trend in 2021, "Gaming" revenues did slacken in 2023. As it stands, this slowdown seems to be manifesting in the current year, with both revenue and operating income trending to close at half of the previous year's levels by the end of the current year. "Client" revenues, however, have had some strong swings: after a dip into operating loss territory in 2023, this segment is poised to post some strong relative improvements, with revenue surging well above par. While "Client" and "Gaming" segments have somewhat mixed trends, "Data Center" and "Embedded" segments show strength. Outside a slowdown in revenue and operating income growth for the "Data Center" segment in 2023, overall trends are generally positive. Operating income and revenue for the current year are already running well above par relative to the previous year in the "Data Center" segment, while the "Embedded" segment is running under par. Now, it bears remembering that both segments are somewhat inter-related: the "Embedded" segment deals with accelerator hardware based on "system-on-a-chip" ((SoC)) architecture-driven products that are predominantly accelerator hardware for areas such as Internet of Things ((IoT)), Edge Computing and Cloud solutions - which bring them very close to the orbit of data centers. Outside financials, "AI" is a prevalent thread in nearly every hardware solution and product currently on offer. In the "Data Center" segment, Microsoft's Azure has instances running on the company's MI300X chips, which are touted as providing leading price/performance for GPT workloads. Even the "gaming" segment -- languishing it is -- has witnessed an expansion of ROCm 6.1.3 software support to improve AI deployment on select variants of the company's Radeon desktop GPUs. However, as the article analyzing the earnings of AMC's main foundry partner TSMC indicated, institutional sentiment is cooling on the hype cycle driving AI and seeks clearly defined and quantifiable objectives behind value propositions. With that in mind, major players except Nvidia have banded together earlier this year to form the Ultra Accelerator Link (UALink) Consortium. It seeks to define an open industry specification towards standardizing the interface for AI and Machine Learning, High-Performance Computing (HPC), and Cloud applications for the next generation of hardware. With business being driven mostly by "corporates," widespread adoption of these standards will be relatively swift and likely to make clear definitions of advances. With the company offering a more complex series of "blended" solutions that balances between hardware and software to derive benchmarks on cost-efficient performance whilst helping define and drive standards on AI-relevant hardware, there are some strong arguments to support the notion that Advanced Micro Devices, Inc.'s relevance within next-generation computing is only beginning. If that were the case, this would be an early price point to adopt the stock into one's portfolio. On the other hand, this quarter (and perhaps the next) will likely be dominated by classics such as energy and financials, continuing to draw capital away from "tech" stocks. This is particularly since the "AI" hype leaves a lot to be desired in terms of analyzing potential impact of innovations. The likes of UALink are bound to be useful in that regard; absent that, skepticism might continue to depress the high price ratio valuations, which both the company's stock and that of Nvidia have in spades. Cautious optimism and an inquiring mind would be in order. For that reason, the overall recommendation is a "Hold."

Advanced Micro Devices Q2 Preview: Focus on AI and data center business

Advanced Micro Devices (NASDAQ:AMD) is scheduled to report its second-quarter earnings on Tuesday, July 30th, after market close, with investors focusing on the company's AI and data center business. Wall Street analysts expect a year-over-year growth for the Santa Clara, California-based company, with a profit of $0.68 per share on revenue of $5.72 billion in its second-quarter results. Research firm Cantor Fitzgerald said that it expected the company to post a modest beat for the quarter, followed by a lower guide as Data Center CPU gains and MI300 uptake offset a slightly weaker PC TAM, slowing console market, and an Embedded market bouncing along the bottom. The brokerage firm also said it expects an update on MI300A/MI300X progress, and most importantly, an updated guide for 2024 accelerator revenues. "The market has been focused on reports of issues at Microsoft for MI300, leading to large cuts in 2H by the CSP," said analysts from the research firm. On the other hand, investment firm Barclays had said that AMD has likely "over-corrected" into earnings. "AMD has round-tripped all performance gains on the year as investors look to be more selective with AI exposures and align with more cyclical/SMID names," analyst Tom O'Malley wrote in an investor note. Earlier in July, the company had announced that Victor Peng would retire as president. Overall, the semiconductor company's stock has lost 5.20% so far this year, falling short against the 14.54% rise in the broader S&P500 Index. Over the last two years, AMD has beaten EPS estimates 75% of the time and has beaten revenue estimates 88% of the time. Seeking Alpha analysts at large consider AMD a Hold. Wall Street analysts are bullish and see the stock as a Buy. Seeking Alpha's Quant ratings consider it a Hold, with a score of 3.15 out of 5, dragged down by its valuation. Over the last three months, EPS estimates have been revised upward 14 times, compared to 20 downward revisions, while revenue estimates have seen 19 upward revisions versus 15 downward moves. More on Advanced Micro Devices Down 40% In 4 Months, Is AMD Stock A Buy Ahead Of Earnings? AMD's Secret Weapon In AI AMD Is About To Accelerate Their Growth Strategy (Earnings Preview) SA Asks: Which chip stocks are undervalued right now?

AMD surges after demand for AI chips bolsters sales forecast

(Bloomberg) -- Advanced Micro Devices Inc. shares rallied after the chipmaker gave an upbeat revenue forecast, underscoring that its new artificial intelligence processors are bolstering growth. Revenue will be roughly US$6.7 billion in the third quarter, the company said in a statement Tuesday. Analysts estimated $6.62 billion on average. Second-quarter results also topped projections, and the company raised its forecast for so-called AI accelerators -- chips used to develop artificial intelligence models. The outlook suggests that AMD is making headway in its pursuit of Nvidia Corp., which dominates the accelerator market. Nvidia has capitalized on booming demand to send its shares and stock price soaring over the past year, becoming the world's most valuable chipmaker in the process. Now AMD is looking to make inroads with its own lineup, called MI300. Chief Executive Officer Lisa Su said Tuesday that AMD expects to generate more than $4.5 billion in sales from its MI300 products this year. That's up from an earlier target of $4 billion, though analysts' estimates have ranged closer to $5 billion. MI300 revenue topped $1 billion in the second quarter, and the company committed to rolling out new AI processors once a year -- a key milestone. "We continued accelerating our AI traction," she said during a conference call with analysts. Cloud computing and enterprise customers are embracing AMD's Instinct MI300X products, she said. And demand is picking up for its traditional personal-computing and server businesses. AMD's second-quarter revenue rose 8.9% to $5.84 billion, beating an estimate of $5.72 billion. Earnings increased to 69 cents a share, compared with a projection of 68 cents. AMD is Nvidia's nearest rival in the accelerator market, but still trailing by a wide margin. The hope is to gain more of the money that data-center operators such as Microsoft Corp. and Meta Platforms Inc. are pouring into the creation of AI tools. Though demand for accelerators has been strong, the appetite for some other AMD products has slowed. Embedded chips and semiconductors for gaming consoles have struggled recently. AMD shares rose about 6.5% in extended trading following the announcement. They had earlier closed at $138.44 in New York, leaving them down 6.1% for the year. AMD's quarterly report kicks off a week of earnings updates from large semiconductor makers. Qualcomm Inc., Arm Holdings Plc and Intel Corp. all report numbers this week, and it comes at a delicate time for the chip industry. Investors have been selling shares of the companies after a dramatic run-up earlier this year. The Philadelphia Stock Exchange Semiconductor Index, a closely watched benchmark, is down 11% this month. For investors, excitement over AI spending has given way to concern that the infrastructure may not have a rapid payoff. Like Intel, AMD still gets most of its revenue from personal computer and server microprocessors. Santa Clara, California-based AMD also competes with Nvidia in the market for graphics processors that improve the images in video games. The company is the biggest rival of Intel in both server and PC processors -- as well as in programmable logic chips, which can be reconfigured with software after they're installed. And it supplies Microsoft and Sony Group Corp. with the main component in their game consoles. AMD's data-center unit had sales of $2.8 billion last quarter, more than double the level from a year earlier. Analysts had estimated $2.75 billion. PC chips brought in $1.5 billion, up 49%. Gaming, meanwhile, was down 59% at $648 million. The two main game consoles that use AMD chips are now in their fifth year, AMD said. Embedded revenue was down 41% from last year at $861 million, hurt by weak demand from customers who have built up stockpiles of parts.

AMD raises forecast for AI chip revenue and sees supplies remaining tight

Advanced Micro Devices on Tuesday increased its 2024 forecast for artificial intelligence chip sales by $500 million and said supplies would remain tight through 2025, sending shares of the Santa Clara, California-based company up 7.5% in extended trading. The AI chips designed by AMD are largely bought by cloud computing giants. Industry insiders and Wall Street view AMD's line of AI chips as one of the few potentially viable competitors to Nvidia, which dominates the market. Shares of Nvidia rose 4.7% following the AMD report. AMD counts Meta Platforms as a customer, and Microsoft launched access to a cluster of AMD chips for AI via its cloud platform earlier this year. Because of surging demand, AMD CEO Lisa Su said, the company boosted its 2024 AI chip revenue forecast to $4.5 billion from a previous target of $4 billion. The supply of such chips will remain tight through 2025, Su said during a quarterly results conference call late Tuesday. In the second quarter, AMD's data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha. For the first time its quarterly AI chip revenue - which is largely concentrated in the data center segment - rose above $1 billion. "We are in the picks and shovels cycle which is more about hardware infrastructure right now," Creative Strategies CEO Ben Bajarin said, making an analogy to the California gold rush, where suppliers of mining tools profited more than some miners. "Most enterprises are spending on AI software but only to trial and pilot programs, (and have) not fully deploy them yet," he said. Such massive spending has not yet generated substantial returns. And on Tuesday, shares of Microsoft fell 6% as growth in its cloud-computing services missed targets, indicating it may take longer for some Big Tech firms to benefit from hefty spending on AI technology. PC BUSINESS RECOVERY Overall, AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter, compared with analysts' average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%. Total revenue in the second quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion. AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. Computer makers hope new AI features will revive consumer demand. "(The) PC business actually is going to do better in second half, especially, typically seasonally," AMD finance chief Jean Hu said. In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha. The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share.

AMD Q2 Earnings: Key Updates About AI (NASDAQ:AMD)

However, I remain concerned about AMD's ability to sustain its growth trajectory in 2025 due to intense competition from Nvidia. Advanced Micro Devices, Inc. (NASDAQ:AMD) reported Q2 earnings yesterday (July 30). The company beat on revenue and was roughly in line with expectations on EPS. On the earnings call, management also provided updates about AMD's data center GPU business, including how its MI300 chips are doing, as well as some information about the company's upcoming GPU roadmap. In this article, I take a closer look at the most significant updates from AMD and consider their implications for the company's future prospects in the data center GPU market. Q2 MI300 Revenue Exceeded $1 Billion For the last few quarters, I have been projecting AMD's quarterly data center GPU revenue based on the company's updates about its MI300 backlog along with commentary from management. I last updated these projections after Q1, arriving at the following revenue figures for 2024 (for a total of $4.3 billion): Q1: $600 million (actual) Q2: $900 million Q3: $1,200 million Q4: $1,600 million. In Q2, AMD came in ahead of my projection by over $100 million. Here is what management stated on the earnings call: Turning to our data center AI business, we delivered our third straight quarter of record data center GPU revenue with MI300 quarterly revenue exceeding $1 billion for the first time. This is a solid beat, representing outperformance of more than 11% compared to my earlier projection. AMD's overall revenue beat by $120 million in Q2, so it seems to me that almost the entirety of the company's revenue beat this quarter may have been driven by outperformance in the data center GPU business. Increased MI300 Backlog For 2024 AMD has been providing backlog figures for the MI300 since late last year. The figure stood at $2 billion in October, $3.5 billion in January, and $4 billion in May. This quarter, the figure was increased by another $500 million or so. Here is what management had to say on the earnings call: Customer response to our multi-year Instinct and ROCm roadmaps is overwhelmingly positive and we're very pleased with the momentum we are building. As a result, we now expect data center GPU revenue to exceed $4.5 billion in 2024, up from the $4 billion we guided in April. Management also expects that MI300 revenue will continue to ramp in both Q3 and Q4. Based on these pieces of information, I am now updating my 2024 quarterly MI300 revenue projections to the following figures (for a total of $4.6 billion): Q1: $600 million (actual) Q2: $1,000 million (actual) Q3: $1,300 million Q4: $1,700 million. Based on these projections, AMD should reach a run-rate of about $6.8 billion/year exiting 2024, which is certainly quite a lot of progress considering that AMD's data center GPU revenues in previous years had been quite negligible. Moreover, it appears that the growth in data center GPU sales over the last year has generated a pretty significant boost for AMD's gross margins (and through them, profitability). As management noted: Gross margin was 53% [in Q2], up 340 basis points year-over-year, primarily driven by higher data center revenue. As MI300 revenue grows further over the remainder of the year, it seems reasonable that gross margins and profitability will likely see a further increase. The Outlook For 2025 Remains Uncertain While AMD's performance in the data center GPU segment looks like it will be strong this year, and will likely reach a fairly high run-rate exiting the year, I remain concerned about AMD's ability to sustain its growth trajectory in 2025. Although the MI300 backlog had grown quite rapidly in late 2023 and early 2024, new orders (at least for 2024) seem to have dried up over the last two quarters. In both Q1 and Q2, the order backlog has only grown by about $500 million. I had downgraded AMD after Q1 based on the slow backlog growth, and I had discussed my worries in more detail in my most recent article about AMD as well. Specifically, I am concerned that AMD's backlog growth has slowed because it is struggling to compete against Nvidia (NVDA). NVDA has been making rather relentless progress on both the hardware and software fronts, especially as it moves from a two-year to a one-year launch cycle for GPUs. Readers can see my detailed analysis of Nvidia's strong technological progress here. AMD CEO Lisa Su was directly asked about the outlook for 2025 on the earnings call. Here was her response: As we go into next year, I mean one of the important things that we announced at Computex, was increasing and expanding our road map. I think we feel really good about our road map. We are on track to launch MI325 later this year. And then next year, our MI350 series, which will be very competitive with Blackwell solutions. And then we're well on our way to our CDNA Next as well. So I think, overall we remain quite bullish on the overall AI market. I think the market continues to need more compute. And we also feel very good that our hardware and software solutions are getting good traction, and we are continuing to expand that pipeline. At least to me, Lisa Su's response seems a bit noncommittal. She seems confident that the overall market for data center GPUs will grow, which could lead to growth for AMD's MI300/MI325 sales as well. But at the same time, it does seem like AMD is struggling to keep up with Nvidia's offerings. I say this because Lisa Su stated that the MI350 (which will presumably launch toward the end of 2025) will be competitive with Nvidia's Blackwell lineup (which is launching this year, with Nvidia expecting "a lot of Blackwell revenue this year"). Nvidia is expected to launch Blackwell Ultra GPUs in 2025, and its future-generation Rubin GPUs should also be in production toward the end of 2025. Therefore, to me, it seems increasingly likely that AMD will continue to lag Nvidia in terms of technology through 2025. If so, it is possible that AMD's strong growth trajectory in data center GPUs could slow in the coming year. On a more positive note, though, management continues to see increased adoption by some large customers as well as a good engagement pipeline. Specifically, it appears that Microsoft is increasing adoption of AMD GPUs for both internal workloads and cloud customers: Microsoft expanded their use of MI300X Accelerators to power GPT-4 Turbo and multiple co-pilot services including Microsoft 365 Chat, Word, and Teams. Microsoft also became the first large hyperscaler to announce general availability of public MI300X instances in the quarter. On the customer pipeline front, management provided the following update: Our enterprise and Cloud AI customer pipeline grew in the quarter, and we are working very closely with our system and cloud partners to ramp availability of MI300 solutions to address growing customer demand. Dell, HPE, Lenovo, and SuperMicro all have Instinct platforms in production, and multiple hyperscale and tier-2 cloud providers are on track to launch MI300 instances this quarter. Overall, I would say that things could go either way for AMD in 2025. On one hand, the strong performance in terms of customer engagements and deployments is heartening for investors. On the other hand, orders for the MI300 in 2024 seem to have dried up, which continues to be an ominous sign, especially as Nvidia pursues a very aggressive hardware and software roadmap. Conclusion In my most recent article on AMD, I had expressed the following overall view about AMD: AMD remains one of the more difficult-to-predict AI plays on the market today. Nvidia is being very aggressive with introducing new products on both the hardware and software fronts, which makes it difficult to forecast how well second-place AMD can do in the coming quarters and years. It is possible that AMD could carve out a decent niche for itself in the data center GPU business. But on the other hand, it is possible that Nvidia could make it very difficult for AMD to hang on to more than a foothold. Based on what we have learned from the Q2 earnings and conference call, I remain uncertain about AMD's data center GPU prospects in 2025 (and beyond). AMD's performance so far this year, as well as for the remainder of the year, is quite impressive. Run-rate data center GPU revenue of almost $7 billion exiting the year is a significant accomplishment, especially considering that AMD was almost irrelevant in this segment until the launch of the MI300. But the slowdown in new orders for 2024, along with a seemingly very difficult to overcome technology gap against Nvidia, means that I remain cautious about AMD going forward. As a result, overall, I maintain a neutral Hold rating for AMD stock. I am a political economist. I have a PhD. I am fascinated by bleeding-edge technology and how it transforms society and the economy. I am particularly interested in semiconductors, artificial intelligence, and space. As an investor, I usually look for high growth, asymmetric risk-reward, cutting-edge technology, and paradigm shifts. Long investment horizon: I try to look ahead at least one year, and usually three to five years. Analyst's Disclosure: I/we have a beneficial long position in the shares of NVDA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

AMD raises forecast for AI chip revenue and sees supplies remaining tight

AMD counts Meta Platforms as a customer, and Microsoft launched access to a cluster of AMD chips for AI via its cloud platform earlier this year. Because of surging demand, AMD CEO Lisa Su said, the company boosted its 2024 AI chip revenue forecast to $4.5 billion from a previous target of $4 billion. The supply of such chips will remain tight through 2025, Su said during a quarterly results conference call late Tuesday. In the second quarter, AMD's data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha. For the first time its quarterly AI chip revenue - which is largely concentrated in the data center segment - rose above $1 billion. "We are in the picks and shovels cycle which is more about hardware infrastructure right now," Creative Strategies CEO Ben Bajarin said, making an analogy to the California gold rush, where suppliers of mining tools profited more than some miners. "Most enterprises are spending on AI software but only to trial and pilot programs, (and have) not fully deploy them yet," he said. Such massive spending has not yet generated substantial returns. And on Tuesday, shares of Microsoft fell 6% as growth in its cloud-computing services missed targets, indicating it may take longer for some Big Tech firms to benefit from hefty spending on AI technology. Overall, AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter, compared with analysts' average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%. Total revenue in the second quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion. AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. Computer makers hope new AI features will revive consumer demand. "(The) PC business actually is going to do better in second half, especially, typically seasonally," AMD finance chief Jean Hu said. In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha. The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share. (Reporting by Arsheeya Bajwa in Bengaluru and Max A. Cherney in San Francisco; Editing by Devika Syamnath, Peter Henderson and Cynthia Osterman)

AMD CEO Lisa Su Says AI Is In Early Stages Of Multiyear 'Supercycle': 'There's Tremendous Need For More Compute' - Advanced Micro Devices (NASDAQ:AMD)

"Everywhere I go, everyone wants to talk about how can we incorporate AI into our businesses faster and more efficiently," Lisa Su says. Advanced Micro Devices Inc AMD shares are rising Wednesday after the company reported strong second-quarter financial results. Following the print, CEO Lisa Su said the chipmaker's performance is being driven by a multiyear AI "supercycle." What To Know: Chip stocks sold off in recent weeks leading up to earnings season as investors began to question how long it would be before companies spending enormous amounts of money on AI would see significant return on investment. This has created chatter that spending on AI could begin to slow, but capital expenditures have remained strong in the early part of earnings season. Su's comments on CNBC's "Squawk On The Street" Wednesday may help put slowdown concerns to rest. "From the conversations that I have with our customer set and sort of the broader industry, we can see that AI is a multiyear, you know, I would call it a supercycle frankly. There's tremendous need for more compute," Su said. AMD reported second-quarter revenue of $5.835 billion and adjusted earnings of 69 cents per share, beating analyst estimates as its AI business continued to see accelerating demand. The chipmaker said on its conference call that it expects GPU revenue to exceed $4.5 billion this year, up from its prior forecast of more than $4 billion. Related Link: Can AMD Stock Hit $180? AI Growth Fuels Data Center Dominance Over Intel Su noted on Wednesday that analysts and investors are "hypersensitive" to a 1% change quarter-over-quarter. She told CNBC that she doesn't believe that's the right way to view the AI story. In a broader context, Su suggested that demand is off the charts. "I wouldn't be hypersensitive in those areas ... Are more customers using it? Is every enterprise asking for it? Are we seeing more applications on a daily, weekly, monthly basis? The answer to that is absolutely yes," the chipmaker CEO said. "Everywhere I go, everyone wants to talk about how can we incorporate AI into our businesses faster and more efficiently ... this early in the cycle, there's a lot of learning and experimentation, but definitely, there will be the return on the investment on the other side." Although the return on investment isn't "instantaneous," it's occurring very quickly, the AMD CEO said. AI is already increasing productivity and helping companies get better products to market faster, she added. "We're investing today for the return in a couple of years, and I think that's absolutely the right thing to do. That's the way to think about these investment cycles." AMD Price Action: AMD shares were well off the highs of the day at publication time, up 4.68% at $144.92, according to Benzinga Pro. Read Next: US Private Employment Rises By 122,000 In July, Misses Estimates: 'If Inflation Goes Back Up, It Won't Be Because Of Labor' Photo: courtesy of AMD. Market News and Data brought to you by Benzinga APIs

AMD forecasts $4.5 billion of AI chip revenue this year, shares jump 7%

AMD CEO Lisa Su said the company was boosting its 2024 AI chip revenue forecast to $4.5 billion from a previous target of $4 billion during the conference call late Tuesday. The supply of such chips will remain tight through 2025, Su said. Overall, AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter compared with analysts' average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%. In the second quarter, AMD's data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha. "We are in the picks and shovels cycle which is more about hardware infrastructure right now," Creative Strategies CEO Ben Bajarin said. "Most enterprises are spending on AI software but only to trial and pilot programs, (and have) not fully deploy them yet." Total revenue in the quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion. AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. New computer AI features are reviving consumer demand. In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha. The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share. Adoption of generative AI technology has driven demand for powerful chips capable of handling the specific processing requirements of applications such as OpenAI's ChatGPT. (Reporting by Arsheeya Bajwa in Bengaluru and Max A. Cherney in San Francisco; Editing by Devika Syamnath and Cynthia Osterman)

AMD forecasts third-quarter revenue above estimates on AI chip demand, shares rise

AMD benefits from large cloud operators buying the company's AI and other chips. Some view the company as an alternative to Nvidia. Both Meta Platforms and Microsoft are customers of AMD's MI300 line of AI chips. AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter compared with analysts' average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%. In the second quarter, AMD's data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha. Total revenue in the quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion. AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. New computer AI features are reviving consumer demand. In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha. The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share. Adoption of generative AI technology has driven demand for powerful chips capable of handling the specific processing requirements of applications such as OpenAI's ChatGPT. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Devika Syamnath and Cynthia Osterman)

AMD forecasts $4.5 billion of AI chip revenue this year, shares jump 6%

AMD CEO Lisa Su said the company was boosting its 2024 AI chip revenue forecast to $4.5 billion from a previous target of $4 billion during the conference call late Tuesday. Overall, AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter compared with analysts' average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%. In the second quarter, AMD's data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha. Total revenue in the quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion. AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. New computer AI features are reviving consumer demand. In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha. The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share. Adoption of generative AI technology has driven demand for powerful chips capable of handling the specific processing requirements of applications such as OpenAI's ChatGPT. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Devika Syamnath and Cynthia Osterman)

Advanced Micro Devices Non-GAAP EPS of $0.69 beats by $0.01, revenue of $5.84B beats by $120M (NASDAQ:AMD)

Advanced Micro Devices press release (NASDAQ:AMD): Q2 Non-GAAP EPS of $0.69 beats by $0.01. Revenue of $5.84B (+9.0% Y/Y) beats by $120M. Record Data Center segment revenue of $2.8 billion was up 115% year-over-year primarily driven by the steep ramp of AMD Instinct™ GPU shipments, and strong growth in 4th Gen AMD EPYC™ CPU sales. Revenue increased 21% sequentially primarily driven by the strong ramp of AMD Instinct GPU shipments. Client segment revenue was $1.5 billion, up 49% year-over-year and 9% sequentially primarily driven by sales of AMD Ryzen™ processors. Gaming segment revenue was $648 million, down 59% year-over-year and 30% sequentially primarily due to a decrease in semi-custom revenue. For the third quarter of 2024, AMD expects revenue to be approximately $6.7 billion vs. $6.61B consensus, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%. Non-GAAP gross margin is expected to be approximately 53.5%. More on Advanced Micro Devices Down 40% In 4 Months, Is AMD Stock A Buy Ahead Of Earnings? AMD's Secret Weapon In AI AMD Is About To Accelerate Their Growth Strategy (Earnings Preview) Advanced Micro Devices Q2 Preview: Focus on AI and data center business AMD has 'over corrected' into earnings, Barclays says; announces Taiwan investment

AMD sells $1 billion worth of AI chips and CPU sales are up but its gaming graphics continues to struggle

AI and CPU sales are up, to but it's still slim pickings in gaming graphics. Sales of AMD's new AI chips are going gangbusters. Well, relatively speaking. AMD's latest results for the second quarter of this year showed that the company flogged roughly $1 billion's worth of its Instinct MI300 AI GPUs in the quarter, up from pretty much zero for the same class of hardware a year ago. Overall, AMD's revenues were up 9% to $5.8 billion compared to the same period last year. Of course, the relative bit arrives when you compare all that with Nvidia's AI GPU sales, which came in at roughly $20 billion for the first quarter of 2024. So, AMD has done well to get a foothold in the mega-profitable AI GPU market. But it's still miles behind Nvidia. On a related note, AMD's CEO Lisa Su indicated the company is essentially selling as many Instinct MI300 AI GPUs as it can make. "The overall supply chain is tight and will remain tight through 2025, " Su said of the Instinct MI300 (via Seeking Alpha). Elsewhere, the news was mostly good but with some mixed indicators. Sales of PC processors were up by a hefty 49% to $1.5 billion, for instance. That's very impressive when you consider AMD is in the process of launching its new Zen 5 chips. Those $1.5 billion of sales will be pretty much all Zen 4 and earlier CPUs. Zen 5 looks very promising, so it all bodes very well. Until you look at AMD's "Gaming" division, that is, where revenues fell by a fairly catastrophic 59%, year on year. To quote Lisa Su again, "turning to our gaming segment, revenue declined 59% year-over-year to $648 million as semi-custom SoC sales declined in-line with our projections. Semi-custom demand remains soft, as we are now in the fifth-year of the console cycle and we expect sales to be lower in the second half of the year compared to the first half. "In gaming graphics, revenue increased year-over-year driven by improved sales of our Radeon 6000 and 7000 series GPUs in the channel," she said. AMD didn't release specifics regarding Radeon sales. But as we understand it, "Gaming" includes both console chips and Radeon graphics. So, the fact that Gaming overall fell so precipitously despite those "improved" Radeon sales implies both that Radeon sales are pretty titchy and that they can't have improved by all that much. Overall, Gaming currently represents just over 10% of AMD's revenues and falling. Indeed, Lisa Su predicted further double-digit percentage falls for the Gaming division for next quarter. Moreover, Su didn't have much to say about those gaming products during the earnings call for investors covering AMD's latest results. There were no upbeat promises of new Gaming products that would begin to turn things around. All of which makes for a mixed feeling for PC gamers. AMD generally is doing well and surely has plenty of resources to invest in future chips. Hooray. But it still doesn't seem to be able to turn around its struggling graphics division. Haroo. We really, really would love to see AMD putting more pressure on Nvidia when it comes to graphics cards. So, here's hoping AMD is fully keeping faith with its Gaming division despite these latest results.

AMD forecasts third-quarter revenue above estimates on AI chip demand

A rise in the adoption of generative AI technology has driven demand for powerful chips capable of handling the specific processing requirements of applications such as OpenAI's ChatGPT. The frenzy of activity has boosted sales for AMD's AI chips. AMD benefits from large cloud operators buying the company's AI and other chips. Some view the company as a viable alternative to Nvidia. Both Meta Platforms and Microsoft are customers of AMD's MI300 line of AI chips. The personal computer market is also recovering after its worst slump in years as the addition of on-device AI features drives a resurgence in end-market demand, aiding sales for AMD, which is among the largest providers of PC chips. The company forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter, compared with analysts' average estimate of $6.61 billion, according to LSEG data. On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Devika Syamnath)

AMD Reports Second Quarter 2024 Financial Results, Profits +17% YoY

AMD reported its financial results for the second quarter of 2024. The company achieved a revenue of $5.8 billion, with a gross margin of 49%. The operating income stood at $269 million, while the net income was slightly lower at $265 million. The earnings per share on a diluted basis were $0.16. When adjusted for certain financial measures (non-GAAP*), the gross margin increased to 53%, operating income rose significantly to $1.3 billion, net income reached $1.1 billion, and the diluted earnings per share improved to $0.69. Dr. Lisa Su, AMD's Chair and CEO, commented on the performance, highlighting the significant achievements of the quarter. She noted that the strong financial results were primarily driven by record revenues from the Data Center segment. Dr. Su emphasized the accelerating growth in AMD's AI business and expressed confidence in the company's potential for continued revenue growth in the latter half of the year. This optimism is supported by strong demand for AMD's Instinct, EPYC, and Ryzen processors. Dr. Su also pointed out the surge in demand for computing capabilities across all markets, spurred by rapid advancements in generative AI, which presents substantial growth opportunities as AMD continues to lead with innovative AI solutions. Jean Hu, AMD's Executive Vice President, Chief Financial Officer, and Treasurer, also shared insights on the quarter's performance. She remarked that the company's revenue exceeded the midpoint of their initial guidance, driven by robust growth in both the Data Center and Client segments. Hu highlighted the expansion in gross margin and the solid earnings growth during the quarter. She further mentioned the strategic investments AMD is making in AI, which are laying the groundwork for future growth. GAAP Quarterly Financial Results Q2 2024Q2 2023Y/YQ1 2024Q/QRevenue ($M)$5,835 $5,359 Up 9%$5,473 Up 7%Gross profit ($M)$2,864 $2,443 Up 17%$2,560 Up 12%Gross margin 49% 46% Up 3 ppts 47% Up 2 pptsOperating expenses ($M)$2,605 $2,471 Up 5%$2,537 Up 3%Operating income (loss) ($M)$269 $(20) Up 1,445%$36 Up 647%Operating margin 5% 0% Up 5 ppts 1% Up 4 pptsNet income ($M)$265 $27 Up 881%$123 Up 115%Diluted earnings per share$0.16 $0.02 Up 700%$0.07 Up 129% Non-GAAP(*) Quarterly Financial Results Q2 2024Q2 2023Y/YQ1 2024Q/QRevenue ($M)$5,835 $5,359 Up 9%$5,473 Up 7%Gross profit ($M)$3,101 $2,665 Up 16%$2,861 Up 8%Gross margin 53% 50% Up 3 ppts 52% Up 1 pptOperating expenses ($M)$1,847 $1,605 Up 15%$1,741 Up 6%Operating income ($M)$1,264 $1,068 Up 18%$1,133 Up 12%Operating margin 22% 20% Up 2 ppts 21% Up 1 pptNet income ($M)$1,126 $948 Up 19%$1,013 Up 11%Diluted earnings per share$0.69 $0.58 Up 19%$0.62 Up 11% "AMD executed well in the second quarter, with revenue above the midpoint of our guidance driven by strong growth in the Data Center and Client segments," said AMD EVP, CFO and Treasurer Jean Hu. "In addition, we expanded gross margin and delivered solid earnings growth, while increasing our strategic AI investments to build the foundation for future growth." Segment SummaryRecord Data Center segment revenue of $2.8 billion was up 115% year-over-year primarily driven by the steep ramp of AMD Instinct GPU shipments, and strong growth in 4th Gen AMD EPYC CPU sales. Revenue increased 21% sequentially primarily driven by the strong ramp of AMD Instinct GPU shipments. Client segment revenue was $1.5 billion, up 49% year-over-year and 9% sequentially primarily driven by sales of AMD Ryzen processors. Gaming segment revenue was $648 million, down 59% year-over-year and 30% sequentially primarily due to a decrease in semi-custom revenue. Embedded segment revenue was $861 million, down 41% year-over-year as customers continued to normalize their inventory levels. Revenue increased 2% sequentially. Recent PR HighlightsAMD expanded its leadership end-to-end AI solutions portfolio with new CPUs, GPUs, NPUs and software offerings:At Computex 2024, AMD unveiled an expanded AMD Instinct accelerator roadmap, bringing an annual cadence of leadership AI performance and memory capabilities. The roadmap includes the new AMD Instinct MI325X accelerator, planned to be available in Q4 2024, with leadership memory capacity and compute performance. The next generation AMD CDNA 4 architecture, planned for 2025, is expected to bring up to a 35x increase in AI inference performance compared to AMD Instinct accelerators based on AMD CDNA 3. AMD announced the AMD Ryzen AI 300 Series processors, the company's third generation processor for AI PCs, with industry-leading 50 TOPs of AI processing power for Windows Copilot+ PCs. OEMs including Acer, ASUS, HP, Lenovo and MSI unveiled new devices powered by the lineup. AMD and industry leaders announced the Ultra Accelerator Link promoter group which will leverage AMD Infinity Fabric technology to advance open standards-based AI networking infrastructure systems. Cloud providers showcased offerings powered by AMD Instinct MI300X accelerators, with Microsoft announcing the general availability of new Azure ND MI300X V5 instances, which provide leading price/performance for GPT workloads. AMD launched the Radeon PRO W7900 Dual Slot GPU for high-performance AI workstations and expanded AMD ROCm 6.1.3 software support to enhance AI development and deployment with select AMD Radeon desktop GPUs. AMD is the partner of choice for many of the most demanding enterprise and HPC workloads:AMD previewed 5th Gen AMD EPYC processors, codenamed "Turin," powered by the new "Zen 5" core architecture and planned to be available in 2H 2024. Oracle announced the HeatWave GenAI solution powered by AMD EPYC CPUs, enabling customers to bring the power of generative AI to their enterprise data without requiring AI expertise. AMD announced the AMD EPYC 4004 Series processors, a new cost-optimized offering that delivers enterprise-class features and leadership performance for small and medium businesses. The latest Top500 List ranked the Frontier supercomputer at Oak Ridge National Lab - powered by AMD EPYC CPUs and AMD Instinct GPUs - the fastest supercomputer in the world for the third year in a row. The list also included three new systems powered by the AMD Instinct MI300A APU at Lawrence Livermore National Laboratories, including the El Capitan Early Delivery System. AMD launched new client and graphics offerings, building on its expansive PC portfolio for commercial, consumer and enthusiast users:AMD announced the new AMD Ryzen 9000 Series processors based on the "Zen 5" architecture, delivering leadership performance in gaming, productivity and content creation. AMD unveiled the AMD Ryzen PRO 8040 Series and 8000 Series mobile and desktop processors with cutting-edge performance, manageability and security features for today's enterprises. Customers across a broad set of markets are leveraging AMD embedded solutions to power computing and AI at the edge:Sun Singapore announced that it is using AMD Zynq UltraScale+ MPSoC devices to power its large network of AI-based smart parking services, accelerating video analytics and real-time inferencing. Optiver announced that it is using a broad range of AMD high-performance compute engines, including AMD EPYC CPUs, AMD Solarflare ethernet adapters, Virtex FPGAs and Alveo accelerators to power its data center infrastructure, unlocking trading performance and efficiency across more than 100 financial markets. RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES(in millions, except per share data) (Unaudited) Three Months Ended June 29, 2024 March 30, 2024 July 1, 2023 GAAP gross profit $2,864 $2,560 $2,443 GAAP gross margin 49% 47% 46% Stock-based compensation 5 6 10 Amortization of acquisition-related intangibles 231 230 212 Acquisition-related and other costs (1) 1 -- -- Inventory loss at contract manufacturer (2) -- 65 -- Non-GAAP gross profit $3,101 $2,861 $2,665 Non-GAAP gross margin 53% 52% 50% GAAP operating expenses $2,605 $2,537 $2,471 GAAP operating expenses/revenue % 45% 46% 46% Stock-based compensation 341 365 338 Amortization of acquisition-related intangibles 372 392 481 Acquisition-related and other costs (1) 45 39 47 Non-GAAP operating expenses $1,847 $1,741 $1,605 Non-GAAP operating expenses/revenue % 32% 32% 30% GAAP operating income (loss) $269 $36 $(20) GAAP operating margin 5% 1% -- % Stock-based compensation 346 371 348 Amortization of acquisition-related intangibles 603 622 693 Acquisition-related and other costs (1) 46 39 47 Inventory loss at contract manufacturer (2) -- 65 -- Non-GAAP operating income $1,264 $1,133 $1,068 Non-GAAP operating margin 22% 21% 20% Three Months Ended June 29, 2024 March 30, 2024 July 1, 2023 GAAP net income / earnings per share $265 $0.16 $123 $0.07 $27 $0.02 (Gains) losses on equity investments, net -- -- 3 -- 3 -- Stock-based compensation 346 0.21 371 0.23 348 0.21 Equity income in investee (7) -- (7) -- (6) -- Amortization of acquisition-related intangibles 603 0.37 622 0.38 693 0.42 Acquisition-related and other costs (1) 46 0.03 39 0.02 47 0.03 Inventory loss at contract manufacturer (2) -- -- 65 0.04 -- -- Income tax provision (127) (0.08) (203) (0.12) (164) (0.10) Non-GAAP net income / earnings per share $1,126 $0.69 $1,013 $0.62 $948 $0.58 (1) Acquisition-related and other costs primarily comprised of transaction costs, purchase price adjustments for inventory, certain compensation charges, contract termination and workforce rebalancing charges.(2) Inventory loss at contract manufacturer is related to an incident at a third-party contract manufacturing facility. Current Outlook AMD's outlook statements are based on current expectations. The following statements are forward-looking and actual results could differ materially depending on market conditions and the factors set forth under "Cautionary Statement" below. For the third quarter of 2024, AMD expects revenue to be approximately $6.7 billion, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%. Non-GAAP gross margin is expected to be approximately 53.5%. Source: AMD

Earnings Summary: AMD tops expectations in Q2, issues strong forecast

More on Advanced Micro Devices Down 40% In 4 Months, Is AMD Stock A Buy Ahead Of Earnings? AMD's Secret Weapon In AI AMD Is About To Accelerate Their Growth Strategy (Earnings Preview) Advanced Micro Devices additional earnings info Advanced Micro Devices Q2 Preview: Focus on AI and data center business

AMDs gaming revenue falls 59%, but company still posts a 9% year-over-year revenue increase

Sales of AMD's gaming hardware dropped a whopping 59% in the second quarter of 2024 as shipments of both its graphics cards and processors for Microsoft's Xbox and Sony's PlayStation game consoles declined. Nonetheless, record sales of datacenter products as well as massively increased sales of processors for client PCs more than offset declined gaming hardware shipments. AMD's revenue for the second quarter of 2024 totaled $5.835 billion, up 9% year-over-year and up 7% quarter-over-quarter. The company's net income reached $1.126 billion and its gross margin increased to 53%. "We delivered strong revenue and earnings growth in the second quarter driven by record Data Center segment revenue," said Dr. Lisa Su, chief executive of AMD. "Our AI business continued accelerating and we are well positioned to deliver strong revenue growth in the second half of the year led by demand for Instinct, EPYC and Ryzen processors. The rapid advances in generative AI are driving demand for more compute in every market, creating significant growth opportunities as we deliver leadership AI solutions across our business." Sales of AMD's datacenter hardware set a record achieving $2.834 billion in Q2 2024, which was up 115% year-over-year. AMD's datacenter business unit earned $743 million in operating income, which was 405% higher compared to the same quarter a year ago. Additionally, AMD's revenue for the datacenter segment rose by 21% from the previous quarter. AMD attributes this significant growth to a sharp increase in shipments of AMD Instinct GPUs and strong sales of the 4th Generation AMD EPYC processors. As far as sales of client processors are concerned, they were up 49% year-over-year and reached $1.492 billion for the second quarter of 2024 drive by success of Ryzen processors. Profitability of client computing business unit was not as high as that of AMD's datacenter unit and hit $89 million, which is much better than a loss of $69 million in Q2 2023. Not all of AMD's business units performed that well. Sales of AMD's gaming hardware -- comprising of Radeon graphics processors and system-on-chips for Microsoft's Xbox and Sony's PlayStation -- dropped sharply to $648 million in Q2 2024, down 59% year-over-year. Still, the business division remained profitable and earned $77 million in operating income. AMD's revenue for its embedded segment was $861 million in Q2 2024, reflecting a 41% decline compared to the same quarter a year ago, as customers continued to adjust their inventory levels. However, revenue increased by 2% from the previous quarter, a good sign for AMD's Xilinx business unit. AMD forecasts revenue for the third quarter of 2024 to be around $6.7 billion ±$300 million. This estimate suggests a year-over-year growth of about 16% and a sequential growth of roughly 15% at the midpoint of the range. The non-GAAP gross margin is projected to be approximately 53.5%.

What's Going On With AMD Stock Tuesday? - Advanced Micro Devices (NASDAQ:AMD)

Analysts expect the company to report earnings of 68 cents per share on revenue of $5.724 billion. Advanced Micro Devices Inc AMD shares are in the spotlight Tuesday ahead of earnings. Here's a look at what investors need to know before the print. What To Know: AMD is set to report second-quarter financial results after the market close on Tuesday. Analysts expect the company to report earnings of 68 cents per share on revenue of $5.724 billion, according to estimates from Benzinga Pro. Last quarter, AMD beat analyst estimates on the top and bottom lines as its Data Center and Client segments each grew more than 80% year-over-year driven by a ramp of AI accelerator shipments. "This is an incredibly exciting time for the industry as widespread deployment of AI is driving demand for significantly more compute across a broad range of markets. We are executing very well as we ramp our data center business and enable AI capabilities across our product portfolio," AMD CEO Lisa Su said at the time. AMD has met or exceeded analyst estimates in six straight quarters heading into Tuesday's print, per Benzinga Pro data. See Also: Taiwan Semi To Break Ground On First European Chip Plant in Germany Recent analyst coverage suggests AMD could be poised to report strong quarterly results. Here's a look at analyst updates from the past two weeks leading up to earnings: Barclays analyst Tom O'Malley maintained AMD with an Overweight and lowered the price target from $235 to $180. Susquehanna analyst Christopher Rolland maintained AMD with a Positive and maintained $200 price target. Cantor Fitzgerald analyst C J Muse maintained AMD with an Overweight and raised the price target from $170 to $200. TD Cowen analyst Matthew Ramsay maintained AMD with a Buy and raised the price target from $200 to $210. Citigroup analyst Christopher Danely maintained AMD with a Buy and raised the price target from $176 to $210. AMD Price Action: AMD shares were down 2.38% at $136.43 at the time of publication, according to Benzinga Pro. Photo: Shutterstock. Market News and Data brought to you by Benzinga APIs