Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Advanced Micro Devices Inc (AMD, Financial) reported a 9% year-over-year increase in revenue to $5.8 billion, driven by strong sales in data center and client segments.
- Data center segment revenue surged by 115% year-over-year to a record $2.8 billion, primarily due to the ramp-up of Instinct MI.300 GPU shipments and Epic CPU sales.
- The company expanded its gross margin by more than three percentage points and grew EPS by 19%, with data center product sales accounting for nearly 50% of overall sales.
- AMD's client segment revenue increased by 49% year-over-year, driven by strong demand for Ryzen processors and initial shipments of next-generation Zen 5 processors.
- The company is on track to launch the MI.325X later this year and the MI.350 series in 2025, which are expected to offer significant performance improvements and maintain competitive positioning.
Negative Points
- Gaming segment revenue declined by 59% year-over-year to $648 million, with expectations of further declines in the second half of the year.
- Embedded segment revenue decreased by 41% year-over-year to $861 million, although there are signs of gradual recovery in the second half of the year.
- The overall supply chain remains tight and is expected to stay constrained through 2025, which could impact production and delivery schedules.
- Despite strong performance in certain segments, the company faces competitive pressures, particularly in the AI and data center markets, which require continuous investment in R&D and software capabilities.
- The company is experiencing a gradual recovery in the embedded segment, indicating that it may take time to return to previous revenue levels.
Q & A Highlights
Q: How do you see the MI. 300 playing out sequentially for the rest of the year? Do you see potential for rapid growth next year?
A: Lisa T. Su, Chair, President & CEO: We are very happy with the progress of MI. 300. We expect MI. 300 revenue to continue ramping in the third and fourth quarters. We have a large pipeline of customers getting familiar with our architecture and software. For next year, we are on track to launch MI. 325X later this year and MI. 350 series next year, which will be very competitive. Overall, we remain bullish on the AI market and our hardware and software solutions are gaining good traction.
Q: Can you update us on your expectations for Epic server CPU growth and your ability to gain share in the server market?
A: Lisa T. Su, Chair, President & CEO: We are very pleased with the progress of Epic. Our fourth-gen uptake, including Genoa and Bergamo, is doing very well with broad adoption across cloud and enterprise. We see positive market trends with a return to spending in both enterprise and cloud. We started production of Turin in the second quarter and expect it to contribute in the second half of the year. Overall, we are confident in our ability to continue growing our share in the server market.
Q: Does the greater than $4.5 billion data center GPU revenue guidance include any revenue from MI. 325X? Can you talk more about MI. 350?
A: Jean X. Hu, Executive VP, CFO & Treasurer: MI. 325X will have a small contribution in the fourth quarter, but the majority of the revenue will come from MI. 300. MI. 350 series will include multiple SKUs ranging from air-cooled to liquid-cooled options. We are investing more in system-level integration to meet customer needs, and MI. 350 will fit into the same infrastructure as MI. 300, allowing for a fast ramp.
Q: How is AMD positioned in the AI PC market, and are you seeing any changes in competitive intensity with the emergence of ARM-based systems?
A: Lisa T. Su, Chair, President & CEO: We are very pleased with our client business results and have a strong roadmap. We are launching both notebook and desktop Zen 5-based products this year. We expect better than typical seasonality in the second half due to strong product launches. The AI PC market is a good revenue growth opportunity for us, and we are well-positioned with our products.
Q: Can you talk about the level of engagement and the intensity of engagement with customers for MI. 300?
A: Lisa T. Su, Chair, President & CEO: We are very pleased with the progress on the Instinct roadmap. This is a long-term play, similar to our Epic journey. We have passed key milestones this year, including getting hardware into multiple hyperscalers and large Tier 2 customers. Our software has matured substantially, and we are investing in system-level integration. We are having long-term conversations with customers across multiple generations, and our roadmap will help us open up more opportunities in the coming years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
