Advanced Micro Devices (AMD): Q1 2024 Highlights
CEO Lisa Su announced that the current landscape is thrilling for the tech industry, fueled by a surge in AI deployment that is increasing demand for computing power across various markets.
In the first quarter, both the data center and client segments experienced over 80% growth year-over-year.
“Under this backdrop, we are executing effectively as we enhance our data center business and expand AI capabilities across our products,” Su shared on an analyst call. However, in after-hours trading, AMD's stock declined 2.9% to $153.58 per share.
Despite the growth, AMD's financial results were tempered. The company's revenue rose to $5.5 billion, impacted by weak gaming sales as the PlayStation 5 and Xbox Series X/S continue into their fifth year on the market.
CFO Jean Hu acknowledged a significant downturn in gaming demand, citing inventory challenges. "We guided down more than 30% for the first and second quarters, with a weaker second half expected for the gaming business this year," Hu stated.
Looking forward, Su emphasized that AI presents an unprecedented opportunity for AMD. “Though we are witnessing significant growth in AI infrastructure, we believe we are still in the early stages of what will be sustained growth driven by the insatiable demand for specialized AI and high-performance general-purpose compute,” she explained during the earnings announcement for the quarter ending March 31.
In the Q&A session, Su praised the supply chain and the launch of new processors, indicating a tight supply amid strong demand.
Data Center Segment
Revenue from the Data Center segment soared 80% year-over-year and 2% sequentially to a record $2.3 billion, primarily due to robust AMD Instinct MI300X GPU shipments and an increase in server CPU sales. Su noted that AMD gained server CPU revenue share amid a seasonally down first quarter, with growing enterprise adoption and expanded cloud deployments.
"Nearly 900 AMD-powered public instances are globally available as Amazon, Microsoft, and Google expand their 4th Gen EPYC processor offerings," she added. The enterprise sector shows signs of increasing demand as CIOs seek more general-purpose and AI compute capacity.
The high core count and energy efficiency of AMD’s EPYC processors allow companies to achieve equal performance with 45% fewer servers compared to competitors, reducing initial capex by up to 50% and annual opex by over 40%.
The enterprise adoption of EPYC CPUs is accelerating, highlighted by deployments with major businesses like American Airlines and Shell. Su expressed enthusiasm for the next-generation Turin family of EPYC processors, expected to launch later this year.
AI Software and GPU Developments
AMD reported a second consecutive quarter of record data center GPU revenue, with the MI300 becoming the fastest ramping product in the company’s history, surpassing $1 billion in sales within two quarters. The MI300X is gaining traction in cloud deployments with companies like Microsoft and Meta for generative AI applications.
Moreover, AMD is advancing AI software capabilities by adding support for its hardware in the OpenAI Triton compiler, enhancing AI software development efficiency.
Client Segment
The client segment revenue reached $1.4 billion, an 85% year-over-year increase, driven by strong demand for the latest Ryzen mobile and desktop processors. However, there was a sequential decline of 6%.
Su reported substantial growth in Ryzen desktop and mobile CPU sales, nearly doubling year-over-year primarily due to new notebook designs. The launch of Ryzen PRO 8000 processors aims to capture further market share in commercial PCs.
Anticipating a return to annual growth in 2024, AMD sees AI as a transformative force in the PC market, with plans for the next-generation Ryzen mobile processors, codenamed Strix, launching later this year.
Gaming Segment
AMD's gaming segment faced challenges, with revenue declining 48% year-over-year and 33% sequentially to $922 million, primarily due to the current console cycle. The introduction of new products like the Radeon RX 7900 GRE is part of its strategy to revitalize this segment.
Embedded Segment
The embedded segment revenue dropped 46% year-over-year and 20% sequentially to $846 million, as customers focus on normalizing inventory. AMD launched its Spartan UltraScale+ FPGA family and expects stabilization with gradual recovery in the latter half of the year, with AI at the edge identified as a key growth opportunity.
Conclusion
Su concluded by stating that AMD performed well in Q1, positioning itself for robust annual revenue growth and improving gross margins due to increasing adoption of its Instinct, EPYC, and Ryzen product lines. AMD's 2024 priorities include accelerating data center growth, launching Zen 5 processors, and expanding its adaptive computing portfolio.
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