AMD says it will sell $4 billion in AI chips this year; stock drops on in-line forecast

Advanced
Micro
Devices
reported

first-quarter
earnings
and
sales
on
Tuesday
that
were
slightly
ahead
of
Wall
Street
expectations,
and
provided
an
in-line
forecast
for
the
current
quarter.

Shares
dropped
7%
in
extended
trading.

Here’s
how
it
did
versus
LSEG
consensus
expectations
for
the
quarter
ended
in
March:

• 
  Earnings
  per
  share:
  62
  cents
  adjusted
  versus
  61
  cents
  expected
• 
  Revenue:
  $5.47
  billion
  vs.
  $5.46
  billion
  expected.

AMD
said
it
expects
about
$5.7
billion
in
sales
in
the
current
quarter,
in
line
with
Wall
Street
estimates
of
the
same
approximate
total.
That
would
represent
about
6%
annual
growth.

The
company
reported
net
income
of
$123
million,
or
7
cents
per
share,
versus
a
net
loss
of
$139
million,
or
9
cents
per
share,
during
the
year-earlier
period.
Revenue
was
up
about
2%
from
a
year
earlier.

AMD
shares
have
risen
14%
in
2024,
so
despite
meeting
forecast
estimates
and
signaling
growth
in
AI
chip
sales,
Tuesday’s
results
were
not
enough
to
prevent
the
stock
from
sliding.

The
chipmaker
said
its
closely
watched
Data
Center
segment
grew
80%
year-over-year
to
$2.3
billion
thanks
to
sales
of
its
MI300
series
AI
chips,
which
compete
with
Nvidia’s
graphics
processing
units.

CEO
Lisa
Su
said
Microsoft,
Meta,
and
Oracle
use
AMD’s
MI300X.
AMD
said
it
had
sold
over
$1
billion
of
the
chips
since
it
launched
in
the
fourth
quarter
of
2023.

AMD
expects
$4
billion
in
2024
AI
chip
sales,
up
from
a
$3.5
billion
forecast
in
January.
For
comparison,
Nvidia,
the
biggest
vendor
of
AI
server
chips,
reported
$18.4
billion
in
sales
—
mostly
AI
chips
—
in
its
data
center
segment
alone
for
the
January
quarter,
the
most
recent
for
which
financial
results
are
available.

Su
told
investors
on
Tuesday
that
the
company
was
working
on
new
AI
chips
and
successors
to
the
current
generation. “We’re
getting
much
closer
to
our
top
AI
customers.
They’re
actually
giving
us
significant
feedback
on
the
road
map,”
Su
said.

AMD
also
makes
central
processors
that
are
often
paired
with
advanced
AI
chips
in
servers.
Su
told
analysts
on
a
call
that
the
company
believed
it
had
taken
market
share
in
the
server
CPU
segment
—
likely
from


Intel.
Su
said
that
AMD
sees “signs
of
improving
demand”
for
its
CPUs
due
to
the
AI
server
boom.

AMD’s
weakest
division
was
its
gaming
segment,
which
was
down
48%
year
over
year
to
$922
million,
which
the
company
said
was
due
to
lower
chip
sales
for
game
consoles
and
PCs.
AMD
makes
chips
for
Sony’s
PlayStation
5,
for
example.
AMD’s
gaming
sales
trailed
a
StreetAccount
estimate
of
$969
million.

AMD’s
original
business,
processors
for
chips
and
PCs,
is
reported
as
client
segment
revenue.
AMD
reported
$1.4
billion
in
first-quarter
sales,
an
85%
annual
increase,
suggesting
that
last
year’s
PC
slump
is
over.
AMD’s
PC
processors
can
run
artificial
intelligence
programs
locally,
which
would
allow
it
to
power
so-called “AI
PCs”
that
many
industry
participants
are
banking
on
to
drive
new
laptop
and
desktop
sales.

The
company’s
embedded
segment,
made
up
of
products
acquired
as
part
of
the
Xilinx
acquisition
in
2022,
reported
falling
sales,
dropping
46%
year
over
year
to
$846
million,
lagging
Wall
Street
expectations
of
$942
million.