AMD’s revenue outlook comes in light, but company gives a rosy AI forecast

For the fourth quarter, AMD modeled $5.8 billion to $6.4 billion in revenue, while analysts were looking for $6.4 billion. The company also said it expected an adjusted gross margin of about 51.5%, which compares with 51% in the third quarter.

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But Wall Street was keen to hear updates on the company’s AI progress heading into the report, and Chief Executive Lisa Su delivered on the earnings call. “Based on the rapid progress we are making with our AI roadmap execution and purchase commitments from cloud customers,” she said that AMD anticipates $400 million in revenue from data-center graphics processing units during the fourth quarter. That total could top $2 billion in 2024.

“The way to think about it is, in the fourth quarter, we said revenue would be approximately $400 million, and that’s mostly HPC [high-performance computing],” though the company would also see its AI ramp start. “And then as we go into the first quarter, we actually expect revenue to be approximately similar in that $400 million range, and that will be mostly AI, so with a very small piece being HPC,” she continued.

Revenue could continue ramping on a quarterly basis moving through 2024, she noted.

“There is a lot of interest in MI300,” Su said, referring to the company’s accelerator product. “We will start, let’s call it, more concentrated in cloud, [with] sort of several large hyperscalers, but we’re also very engaged across the enterprise and there’s a lot of interest.”

The company posted third-quarter net income of $299 million, or 18 cents a share, compared with $66 million, or 4 cents a share, in the year-before quarter.

On an adjusted basis, AMD earned 70 cents a share, up from 67 cents a share a year before, while analysts tracked by FactSet were expecting 68 cents a share.

Revenue increased to $5.80 billion from $5.57 billion a year before, while the FactSet consensus was for $5.70 billion.

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Data-center revenue came in at $1.6 billion, flat with the year-earlier sum and in line with the FactSet consensus, as AMD saw growth from its 4th Gen Epyc central processing units but declines in adaptive system-on-chip (SoC) data-center products.

Revenue for that segment was up 21% sequentially, however. “Our data-center business is on a significant growth trajectory based on the strength of our Epyc CPU portfolio and the ramp of Instinct MI300 accelerator shipments to support multiple deployments with hyperscale, enterprise and AI customers,” Su said in a release.

AMD posted $1.5 million in client-segment revenue, up 42% from a year before amid strength in Ryzen mobile processors. The FactSet consensus was for $1.2 billion.

Gaming revenue fell 8% to $1.5 billion and matched the FactSet consensus.

The company also saw $1.2 billion in embedded sales, down 5% from a year before and slightly below the FactSet consensus of $1.3 billion.

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