Advanced Micro Devices (AMD) reported a strong Q3 performance with earnings meeting expectations and revenue slightly surpassing forecasts. The company's data center sector, driven by AI chip sales, saw significant growth, doubling its sales for the second consecutive quarter. Despite this, AMD's stock experienced a drop in after-hours trading. The company's AI chips, particularly the newly announced MI325X, are seeing high demand, positioning AMD as a key player in the burgeoning AI market.
Advanced Micro Devices (AMD) has released its third-quarter earnings for 2024, showcasing a robust financial performance with key growth in its data center and AI chip sectors. Despite meeting Wall Street's earnings expectations and slightly exceeding revenue forecasts, AMD's stock saw a decline in after-hours trading. The company's strategic focus on AI technology and its new MI325X chip highlight its efforts to capture a larger share of the lucrative AI market.
AMD reported third-quarter earnings of 92 cents per share, aligning with expectations, and revenue of $6.82 billion, surpassing the anticipated $6.71 billion. This represents an 18% increase in revenue year-over-year. Despite this positive performance, AMD's stock fell by 7% in extended trading, reflecting investor reactions to the company's fourth-quarter revenue guidance, which was in line with, but did not exceed, consensus expectations. This market response underscores the high expectations placed on major tech companies in the current economic climate.
AMD's significant growth in the third quarter was largely driven by its data center business, which doubled its sales for the second consecutive quarter, reaching $3.5 billion. This surge is attributed to strong sales of AMD's Instinct-branded GPUs, tailored for AI applications. The newly announced MI325X AI chip has garnered high customer and partner interest, with production shipments expected to commence this quarter. AMD's focus on AI chips is a strategic move to capitalize on the expected $500 billion AI GPU market by 2028.
Despite the competitive pressures from rivals like Nvidia and Intel, AMD is making significant strides in the AI sector, marked by its new chip launches and robust sales forecasts. CEO Lisa Su emphasized the company's commitment to AI as its top priority, reflecting AMD's strategic positioning to leverage growing demand for AI infrastructure across various industries. The company anticipates $5 billion in AI chip sales this year, up from a previous forecast of $4.5 billion, indicating strong market confidence and expanding business opportunities.
AMD's third-quarter earnings report highlights a company at a pivotal growth phase, particularly in the AI chip market. While the immediate market reaction was mixed, the strategic developments and financial results suggest a strong future trajectory for AMD. As the AI technology landscape evolves, AMD appears well-positioned to meet the increasing demand for advanced computing solutions, potentially reshaping its market standing and investor perceptions in the coming years.
"Customer and partner interest for MI325X is high. Production shipments are planned to start this quarter." - Lisa Su