Advanced Micro Devices, Inc. (AMD) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Q2 Financial Results: AMD reported strong second quarter financial results with revenue exceeding guidance and profitability increasing by double digits, driven by higher sales of Instinct, Ryzen, and EPYC processors.

• Record Data Center Segment Revenue: Data center segment revenue increased 115% year-over-year to a record $2.8 billion, driven by steep ramp of Instinct MI300 GPU shipments and strong EPYC CPU sales.

• AI Traction and Cloud Adoption: AMD accelerated its AI traction with leading cloud and enterprise providers expanding availability of Instinct MI300X solutions. Cloud adoption remains strong with hyperscalers deploying fourth-gen EPYC CPUs.

• Client Segment Growth: Client segment revenue was up 49% year-over-year, driven by strong demand for Ryzen processors and initial shipments of next-generation Zen 5 processors.

• Embedded Segment Recovery: Although the embedded segment revenue decreased year-over-year, there were early signs of order patterns improving, expecting a gradual recovery in the second half of the year.

Pessimistic Highlights

• Decline in Gaming and Embedded Product Sales: Significantly higher sales in data center and client processors were offset by declines in gaming and embedded product sales.

• Semi-Custom SoC Sales Decline: Semi-custom demand remains soft, with sales expected to be lower in the second half of the year compared to the first half.

Company Outlook

• Revenue Growth Driven by Data Center and Client Segments: AMD is well positioned to grow revenue significantly in the second half of the year, driven by data center and client segments. Data center GPU business is on a steep growth trajectory with shipments ramping across an expanding set of customers.

• Investments in AI and Roadmap Acceleration: AMD plans to deliver an annual cadence of AI accelerators, starting with the launch of MI325X later this year, followed by MI350 series in 2025, and MI400 series in 2026. Investments in AI companies and acquisitions like Silo AI aim to expand the AMD AI ecosystem.

Q & A Highlights

• Q: How do you see MI300 playing out sequentially for the rest of the year? (Ben Reitzes, Melius Research)

  A: MI300 revenue is expected to continue to ramp in Q3 and Q4, expanding deployments with existing customers and working through a large pipeline of new customers. AMD remains bullish on the overall AI market and feels good about their hardware and software solutions traction.

• Q: How are you thinking about EPYC server CPU growth expectations going forward? (Aaron Rakers, Wells Fargo)

  A: AMD is pleased with EPYC's progress and sees positive market trends with a return to spending in both enterprise and cloud. The launch of Turin in the second half of the year is expected to contribute to revenue and continue growth in the server market.

• Q: Can you talk about the Data Center GPU roadmap and the inclusion of MI325 in the annual forecast? (Timothy Arcuri, UBS)

  A: MI325X is on track to launch later this year with a small contribution in Q4, primarily still MI300 capabilities. MI350 series will offer multiple SKUs ranging from air-cooled to liquid-cooled, fitting into the same infrastructure as the MI300 series.

• Q: How do you view the AI PC market and AMD's position within it? (Ross Seymore, Deutsche Bank)

  A: AMD is very pleased with their Client business results and sees the AI PC as an important addition to the overall PC category. The launch of Zen 5 based products is expected to drive above-seasonal growth in the second half of the year.

• Q: Can you draw parallels between the Instinct portfolio rollout and the EPYC journey? (Matt Ramsey, Cowen)

  A: The Instinct rollout has many parallels to the EPYC journey, focusing on long-term engagement and software/hardware co-optimization. AMD is playing the long game with Instinct, with deep customer engagement across multiple generations.