The semiconductor sector has been getting pummeled on the stock market lately over international trade policy concerns and other issues. Will a stronger than expected second quarter earnings report from AMD help bring back some of the wilting market enthusiasm?
AMD Tuesday afternoon reported a 9% year-over-year increase in revenue, from $5.35 billion in Q2 2023 to $5.83 billion in Q2 2024. This included a 115% year-over-year jump in revenue in the company’s Data Center segment to $2.8 billion. AMD chief Lisa Su attributed the growth to robust shipments of the company’s Instinct GPUs, as well as strong growth in sales of AMD’s 4th Gen EPYC CPU.
“We delivered our third straight quarter of record data center GPU revenue with [Instinct] MI300 quarterly revenue exceeding $1 billion,” Su said during the second quarter earnings call, adding later, “Our enterprise and cloud AI customer pipeline grew in the quarter, and we are working very closely with our system and cloud partners to ramp availability of MI300 solutions To address growing customer demand, Dell, HPE, Lenovo, and Supermicro all have Instinct platforms in production, and multiple hyperscale and Tier 2 cloud providers are on track to launch MI300 instances this quarter.”
Su said the Instinct products on the company’s roadmap, including the MI325X and MI350X, will strengthen AMD’s argument for more AI data center servers in the quarters to come. “From a revenue standpoint, there will be a small contribution [from the MI325X] in the fourth quarter, but it really is still mostly the MI300 contributing, and the 325X will start contributing the next quarter, and then ramp more in the first half of next year,” Su said, adding later, “We're very pleased with the progress that we're making on Instinct platform.”
Meanwhile, AMD’s Client segment revenue also soared during the second quarter, up 49% year-over-year and 9% sequentially to $1.5 billion.
Other business segments did not fare quite as well, as AMD’s Gaming segment revenue came in at $648 million, representing a 59% year-over-year and 30% sequential decline, primarily due to a decrease in semi-custom revenue, AMD said.
Also, Embedded segment revenue was down 41% year-over-year–but up 2% sequentially–to $881 million as customers continued to normalize their inventory levels.
The company also issued a pretty positive outlook for the third quarter of this year, saying it expects revenue around $6.7 billion, plus or minus $300 million. “At the mid-point of the revenue range, this represents year-over-year growth of approximately 16% and sequential growth of approximately 15%,” the company stated.
Significantly, Su also said AMD’s AI chip revenue for the full year of 2025 is expected to come in at about $4.5 billion, which is about $500 million more than the company previously had been expecting.
Su added that industry-wide investment in AI is not close to ebbing, as plenty of opportunity remains in both AI training and AI inference as the enterprise market needs shift from the former to the latter.
“I think the investment cycle will continue to be strong,” she said. “Relative to the various choices for the size of the market, I firmly believe that there will be multiple solutions adopted, whether you're talking about GPUs, CPUs, custom chips or ASICs, there will be multiple solutions.”
The sunny earnings report and outlook drove an after-the-bell boost in AMD's shares, with value rising as much as 10% compared to Tuesday'sclosing price of $138.44 per share.