AMD Gives Soft Fourth-Quarter Guidance, but Anticipates Selling $2 Billion of AI Chips Next Year

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AMD Gives Soft Fourth-Quarter Guidance, but Anticipates Selling $2 Billion of AI Chips Next Year
AMD Gives Soft Fourth-Quarter Guidance, but Anticipates Selling $2 Billion of AI Chips Next Year

The business is one of the few chipmakers capable of producing the high-end graphics processing units (GPUs) required for training and deploying generative AI models.

AMD posted third-quarter results that exceeded analyst estimates on Tuesday; however, the chipmaker provided a lower-than-expected projection.

Here’s how the company fared against LSEG (previously Refinitiv) consensus estimates for the September quarter:

EPS: 70 cents adjusted, compared to 68 cents projected

Revenue: $5.8 billion, compared to the estimated $5.7 billion.

AMD forecasts sales of roughly $6.1 billion in the fourth quarter, compared to analysts’ expectations of $6.37 billion.

AMD is one of the few chipmakers capable of producing the high-end graphics processing units (GPUs) required to train and deploy generative AI models. Nvidia is the market leader in this segment. AMD stated that volume production of its upcoming AI processors, the MI300A and MI300X, is “on track” for the current quarter.

The stock fell around 4% in extended trade but recovered after the company issued a bullish prediction for its AI chip business in 2024.

“We now expect data center GPU revenue to be approximately $400 million in the fourth quarter and to exceed $2 billion in 2024 as revenue ramps throughout the year,” AMD CEO Lisa Su stated during the conference call.

Net income increased to $299 million, or 18 cents per share, in the third quarter from $66 million, or 4 cents per share, the previous year. Revenue climbed 4% from $5.6 billion the previous year.

GPU sales were $1.6 billion, the same as the previous year. AMD reported increased server CPU sales. The chipmaker also stated that it expects substantial growth in its data center sector in the fourth quarter.

“We would like to be a significant player in this market,” Su went on to say.

Su also discussed recent AI acquisitions and advancements to the company’s AI software suite throughout the call.

“I think we all see the growth in generative AI workloads, and the fact is we’re just in the very early innings of people truly adopting it for enterprise business productivity applications,” Su told me.

Revenue in AMD’s Client segment, which includes PC processor sales, increased 42% year on year to $1.5 billion, fueled by PC chips.

Intel published third-quarter earnings last week, which exceeded estimates for profit and sales but nevertheless indicated a year-over-year revenue dip.

AMD’s embedded division revenue fell 5% to $1.2 billion, blaming a sluggish communications market. This contains networking components as well as the company’s field programmable gate array unit, which it acquired when it purchased Xilinx.

Because of fewer “semi-custom” chip shipments, AMD’s gaming division sales fell 8% to $1.5 billion. That is the name given to the company’s division that manufactures processors for consoles such as Sony’s PlayStation 5.

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