The market leader in chips, AMD (AMD), surpassed analysts’ projections for both the top and bottom lines of its second quarter earnings and provided better-than-expected outlook for the third quarter when it released its results on Tuesday after the bell.
Similar to competitor Nvidia, AMD is capitalizing on the artificial intelligence (AI) craze to drive sales of its central processing units (CPUs) and graphics processing units (GPUs) for data centers. AMD reported $5.8 billion in revenue and adjusted profits per share (EPS) of $0.69 for the quarter. Based on $5.7 billion in revenue, Wall Street was expecting adjusted EPS of $0.68, as per Bloomberg’s average projections. In 2023, AMD recorded adjusted earnings per share (EPS) of $0.58 on $5.4 billion in revenue.
“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,” Lisa Su, AMD CEO, said in a statement.
“As we deliver leadership AI solutions across our business, the rapid advancements in generative AI are driving demand for more compute in every market, creating significant growth opportunities.”
In pre-market trade on Wednesday, shares of rival Nvidia (NVDA) increased by 5%, while those of AMD surged by nearly 9%. Intel (INTC) stock was up 2%.
Above estimates of $2.75 billion, AMD’s Data Center revenue, which includes sales of its GPUs and CPUs, peaked at $2.8 billion. Comparing that to the same quarter last year, AMD recorded Data Center revenue of $1.3 billion, a 115% increase.
Currently, AMD’s top GPU is the MI300X. At a June press conference at Computex, a technology trade show in Taiwan, AMD stated that the chip is already being adopted by partners and clients like as Microsoft, Meta, Dell, HPE, and Lenovo. Additionally, the business disclosed that the MI350X will go on sale in 2025 and that the next-generation MI325X would be available starting in Q4. AMD stated that the MI400 will be available in 2026.
But for AMD, it’s not just AI that counts. Sales of PC chips are included in its Client sector, which continues to be a significant portion of its business. The business reported sales for the quarter of $1.5 billion, which exceeded estimates of $1.45 billion and increased from $998 million in the same time the previous year.
The PC industry is still recovering from a major downturn that followed its rapid expansion at the start of the pandemic, as evidenced by the Client segment beat.
However, that was four years ago, and now people are starting to look for new computers to replace the ones they purchased at the beginning of the pandemic. This led to a 3% year-over-year increase in worldwide PC shipments in the second quarter, according to IDC, which marks the second quarter of gain following eight straight quarters of decreases.
In Q2, gaming revenue reached a peak of $648 million, above projections of $646 million but down 59% year over year from $1.5 billion.
Similar to the PC market, the gaming sector has experienced a downturn in comparison to the early epidemic era’s frenzied sales. Nevertheless, with Nintendo getting ready to release its next platform and Take-Two getting ready to release the much awaited “Grand Theft Auto VI” later in the year, there is still hope for the gaming industry through the end of 2024 and the beginning of 2025.
Out of the three major semiconductor makers, AMD is the first to release its Q4 numbers. On August 1, Intel will do likewise, and on August 28, Nvidia will release its financial results.