AMD Reports Q3 Earnings Exceeding Expectations and Highlights a Positive 2024 Outlook

AMD announced its Q3 earnings on Tuesday, revealing results that exceeded analyst expectations. The chipmaker’s performance in the third quarter demonstrated notable strengths, despite issuing a weaker-than-expected forecast.

Here’s a quick look at how AMD performed compared to LSEG (formerly Refinitiv) consensus estimates for the quarter ending in September:

• Earnings Per Share (EPS): 70 cents, adjusted, versus the expected 68 cents.
• Revenue: $5.8 billion, as opposed to the expected $5.7 billion.

While the stock initially experienced a 4% dip in extended trading, it rebounded following the company’s optimistic 2024 forecast for its AI chip business.

AMD’s significance lies in its capability to produce high-end graphics processing units (GPUs), a critical component for training and deploying generative artificial intelligence models. In this space, Nvidia has been a dominant player. AMD, however, is making strides with its forthcoming AI chips, the MI300A and MI300X, which are “on track” for volume production in the current quarter.

AMD CEO Lisa Su shared a positive outlook during the earnings call, particularly in the data centre GPU segment, stating, “We now expect data centre GPU revenue to be approximately $400 million in the fourth quarter and exceed $2 billion in 2024 as revenue ramps throughout the year.”

In Q3, net income rose to $299 million, equivalent to 18 cents per share, from $66 million (4 cents per share) a year ago. Revenue witnessed a 4% increase from $5.6 billion in the previous year.

The data centre segment, which includes server processors and AI chips (GPUs), reported $1.6 billion in sales, maintaining the same level as the previous year. AMD highlighted sales growth in its server CPUs and expressed optimism for a robust fourth quarter in its data centre business.

Lisa Su mentioned the company’s recent AI acquisitions and improvements in the AI software suite, underscoring the growth potential of generative AI workloads in enterprise business productivity applications.

AMD’s Client group, encompassing PC processors, reported a substantial 42% year-over-year revenue growth, reaching $1.5 billion. This surge was primarily driven by PC chip sales.

While AMD’s embedded segment revenue dropped by 5% to $1.2 billion, attributed to a sluggish communications market, the company is poised to explore growth avenues. Sales in the gaming segment also experienced an 8% decline to $1.5 billion, mainly due to reduced “semi-custom” chip sales used in consoles like Sony’s PlayStation 5.

Overall, AMD’s Q3 earnings signal resilience and provide a glimpse into a promising future, particularly in the realm of AI chips and generative AI workloads.