AMD Q3 2024 Earnings Report

Advanced micro devices (AMD) reported third-quarter results on Tuesday, with profits in line with forecasts and sales slightly above expectations.

Here's how the company performed compared to LSEG estimates for the quarter ended September 28:

• Earnings per share: 92 cents adjusted versus 92 cents expected
• revenue: $6.82 billion versus expected $6.71 billion

AMD said its key data center business doubled revenue for the second quarter in a row, but its overall fourth-quarter revenue forecast was in line with consensus expectations.

AMD shares fell 5% in extended trading on Tuesday.

AMD said it expected revenue of about $7.5 billion for the current quarter, in line with consensus expectations for adjusted earnings per share of $1.16 on revenue of $7.54 billion. That would be a year-on-year decline of 22% for the December quarter.

The chipmaker reported net income of $771 million, or 47 cents per share, compared with $299 million, or 0.18 cents per share, a year earlier. Total mean absolute deviation (MAD) sales increased 18% on an annual basis.

AMD shares are up about 20% so far in 2024, even as rivals like Nvidia and Broadcom posted much larger gains over the same period, driven by rising demand for AI chips. AMD is the second largest provider of data center graphics processing units (GPUs), which are used to train and deploy large generative AI models.

In October, AMD announced a new artificial intelligence chip called MI235X and said the AI ​​GPU market would be worth $500 billion by 2028. The company also said earlier this year that it expected total sales of AI chips to be about $4 billion this year, or about 15% of the company's total sales.

AMD's AI chips are reported in the data center segment, whose total revenue more than doubled annually to $3.5 billion. AMD said this was primarily due to strong sales of its Instinct-branded GPUs for AI. Total data center revenue increased 122% year-over-year.

AMD's gross margin rose to 54%, which the company said was driven by higher data center sales.

AMD also makes core processor chips for laptops and servers. PC sales are reported in AMD's client segment, which grew 23% to $1.9 billion in the quarter. During the quarter, AMD's chips were built into high-end laptops marketed by Microsoft as “Copilot+” machines that can run the advanced AI included in Windows.

AMD also makes chips for gaming consoles and PCs. The gaming category slumped and sales fell 68% year-over-year, which the company attributed to a decline in “semi-custom sales,” which include custom chips for gaming consoles such as the Sony PlayStation 5.

The company's embedded business, which includes lower-cost chips for industrial and other applications, fell 25% annually to $927 million.