AMD Reports Impressive Q1 Data Center Revenue Despite Weakness in Gaming Sales

Advanced Micro Devices (AMD) Reports Strong Data Center Growth Amid Gaming Decline

AMD experienced robust data center revenue growth of 80% in Q1 2024, ending March 31, although gaming revenue fell by 48%. Similar to its competitor Nvidia, AMD’s data center and client segments are significantly driving revenue, outpacing its gaming division.

Looking ahead, AMD anticipates Q2 revenue between $5.4 billion and $6 billion, with a midpoint forecast reflecting a year-over-year increase of approximately 6% and sequential growth of about 4%. AMD produces central processing units (CPUs) and graphics processing units (GPUs) essential for AI systems, graphics cards, and PCs.

“We delivered strong first-quarter results, with our Data Center and Client segments each growing over 80% year-over-year, fueled by MI300 AI accelerator shipments and the adoption of our Ryzen and EPYC processors,” stated AMD CEO Lisa Su. “The widespread deployment of AI is driving demand for enhanced computing across numerous markets. We are well-positioned as we expand our data center business and integrate AI capabilities throughout our product lineup.”

In after-hours trading, AMD’s stock experienced a slight decline, down 2.9% to $153.58 per share.

Q1 2024 Highlights

AMD's market capitalization stands at $159 billion, surpassing rival Intel’s $153 billion. During a recent earnings call, Su noted that AMD gained market share in data center chips this quarter. She also expressed confidence in capturing more share as the PC market stabilizes.

Analysts had projected non-GAAP Q1 earnings per share at 61 cents, with revenue expected at $5.46 billion. AMD reported a GAAP net income of 7 cents per share, rebounding from a loss of 9 cents per share last year. Non-GAAP net income reached $1.01 billion, or 62 cents per share, reflecting a 3% increase compared to the previous year.

“AMD began the year with strong performance, achieving record quarterly Data Center segment revenue,” stated CFO Jean Hu. “We also saw significant gross margin expansion and are in an excellent position to continue driving revenue growth and margin improvement as we capitalize on substantial AI opportunities.”

Segment Performance Overview

In the client segment, AMD recorded $1.4 billion in sales, an 85% increase year-over-year, primarily driven by sales of AMD Ryzen 8000 processors, though revenues decreased by 6% sequentially. Data center sales reached $2.3 billion, up 80% year-over-year, primarily due to growth in AMD Instinct GPUs and 4th Gen AMD EPYC CPUs. This segment saw a sequential revenue increase of 2%, bolstered by a full quarter of AMD Instinct GPU sales, despite a seasonal decline in server CPU sales.

The embedded segment generated $846 million, down 46% year-over-year, as customers adjusted their inventory levels, resulting in a sequential revenue decline of 20%. The gaming segment's revenue was $922 million, reflecting a 48% drop year-over-year due to decreased semi-custom revenue and lower AMD Radeon GPU sales, with a sequential decline of 33%.

Last week, Intel reported Q1 revenue of $12.7 billion, a 9% year-over-year increase, and forecasts Q2 2024 revenue between $12.5 billion and $13.5 billion.

During the quarter, AMD expanded its commercial AI PC processor portfolio with the launch of new AMD Ryzen PRO notebook and desktop processors featuring advanced AI capabilities and compute performance. At the “Advancing AI PC Innovation Summit,” AMD showcased how it is enabling emerging AI experiences, with partners like Lenovo and HP demonstrating over 100 AI applications on AMD platforms. AMD expects more than 150 independent software vendors to be developing for Ryzen AI by year-end.