Advanced Micro Devices (AMD) has announced that its revenue for the second quarter reached $5.36 billion, representing an 18% decrease from the previous year. Despite this decline, investors are optimistic about the company’s future, especially considering its involvement in the high-demand artificial intelligence (AI) market. As a result, AMD’s stock rose by 5% to $123.5 per share during after-hours trading.
Analysts predicted that AMD’s second-quarter earnings per share would be 57 cents with revenue of $5.31 billion. However, the company managed to surpass these expectations. On a non-GAAP basis, AMD reported a net income of $948 million, or 58 cents per share, which is 45% lower compared to the previous year. Despite the decrease, both net income and revenues exceeded analyst predictions.
AMD’s CEO Lisa Su expressed her satisfaction with the second-quarter results, emphasizing the significant ramp-up of the 4th Gen Epyc and Ryzen 7000 processors. The company also experienced a substantial increase in AI engagements, with multiple customers initiating or expanding programs to support future Instinct accelerator deployments on a larger scale.
AMD CFO Jean Hu expects further growth in the third quarter, particularly in the data center and client segments. Double-digit percentage revenue growth is anticipated, driven by the increasing demand for Epyc and Ryzen processors. This growth may be partially offset by declines in the gaming and embedded segments.
Furthermore, AMD has announced its plan to launch and increase production of MI300 accelerators in the fourth quarter. This move further underscores the company’s commitment to meeting customer demands for data center AI solutions.
Client Group: In terms of PC processor sales, AMD’s client group reported a sizable decline of 54% compared to the previous year. However, revenue for this segment increased by 35% sequentially due to significant ramp-up of Ryzen 7000 Series CPUs and improved PC market conditions. The company is set to launch over 100 AMD-powered commercial PC platforms throughout this year.
Data Center: AMD’s data center sales fell by 11% to $1.3 billion, primarily because of soft enterprise demand and elevated cloud inventory levels at certain customers. Nevertheless, during the second quarter, revenue increased by 2%, driven by the doubling of 4th Gen AMD Epyc CPU revenues and increased sales of Epyc CPUs for enterprise use.
Embedded Segment: The embedded segment, including networking chips, experienced growth of 16% to $1.5 billion compared to the previous year. This growth was fueled by strength in the Industrial, Vision and Healthcare, Automotive, and Test and Emulation markets. However, revenue declined by 7% compared to the previous quarter due to softness in the communications market.
Gaming Segment: AMD’s gaming segment, which includes graphics processors for PCs and chips for gaming consoles, saw a 16% increase in sales compared to the previous year, reaching $1.6 billion. This growth was mainly driven by the expansion of semi-custom chip sales. However, revenue declined by 10% sequentially due to lower gaming graphics sales.
Competitor Comparison
In comparison, AMD’s rival Intel reported a net income of $500 million, or 13 cents per share, for the second quarter, representing a 54% decrease from the previous year. Intel’s revenue also decreased by 15% to $12.9 billion. This data highlights AMD’s relatively stronger performance during the same period.
AMD showcased its highly-anticipated Bergamo and Genoa-X Epyc CPUs during the second quarter, garnering attention from major customers such as AWS, Alibaba, Microsoft Azure, and OCI. Additionally, Cerebras unveiled its Condor Galaxy 1 cloud-based AI supercomputer, which boasts over 70,000 AMD Epyc CPU cores, further solidifying AMD’s position in the AI market.
AMD’s strong second-quarter results, beating expectations for both revenue and net income, have instilled confidence in investors. With promising developments on the horizon and a positive outlook for future growth, AMD is well-positioned to capitalize on the increasing demand for its processors and GPUs in the AI industry.
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