AMD revenues fall 18% to $5.36B as PC market recovers and AI rises

Advanced Micro Devices reported that revenue in its second quarter was $5.36 billion, down 18% from a year earlier as the client PC market continues to climb back during the economic downturn.

But investors took the report as good news, as AI-related stocks such as AMD, which makes the processors and graphics processing units (GPUs) used in AI machines, are riding on high demand for AI. In after-hours trading, AMD’s stock rose 5% to $123.5 a share. PC market conditions also improved from the previous quarter. As a result, AMD beat expectations for both revenues and net income.

Analysts expected Q2 earnings per share to come in at 57 cents on revenue of $5.31 billion. GAAP net income for Q2 came in at $27 million, or 2 cents a share, down 93% from a year ago. On a non-GAAP basis, net income for Q2 was $948 million, or 58 cents a share, down 45% from a year ago. So, AMD beat the numbers on both net income and revenues.

“We delivered strong results in the second quarter as 4th Gen Epyc and Ryzen 7000 processors ramped significantly,” said AMD CEO Lisa Su, in a statement. “Our AI engagements increased by more than seven times in the quarter as multiple customers initiated or expanded programs supporting future deployments of Instinct accelerators at scale. We made strong progress meeting key hardware and software milestones to address the growing customer pull for our data center AI solutions.”

She said the company is on track to launch and ramp production of MI300 accelerators in the fourth quarter.

“We are pleased with our second quarter execution,” said AMD CFO Jean Hu, in a statement. “Looking to the third quarter, we expect our data center and client segment revenues to each grow by a double-digit percentage sequentially driven by increasing demand for our Epyc and Ryzen processors, partially offset by gaming and embedded segment declines.”

AMD also said it expects about $5.7 billion in sales in the current third second quarter, plus or minus $300 million. It expects non-GAAP gross profit margins of 51%.

Among AMD’s divisions, AMD’s client group, which includes PC processor sales, saw a sizable decline from a year ago. AMD reported $998 million in sales for the client group, down 54% from a year ago. Revenue was up 35% sequentially as AMD Ryzen 7000 Series CPUs ramped significantly and PC market conditions improved. More than 100 AMD-powered commercial PC platforms are set to launch this year.

For the data center, AMD sales fell 11% to $1.3 billion compared to last year. That was due to lower third-generation Epyc processor sales as enterprise demand was soft and cloud inventory levels were elevated at some customers. AMD said there are more than 670 AMD-powered cloud instances publicly available. And AMD Instinct MI300A and MI300X GPUs are sampling to high-performance computing, cloud and AI customers. Sequentially, revenue was up 2% as 4th Gen AMD Epyc CPU revenues doubled and Epyc CPU enterprise sales increased, offset by a decline in adaptive system-on-chip data center products.

The embedded segment, which includes networking chips, grew 16% to $1.5 billion compared to a year ago thanks to strength in the Industrial, Vision and Healthcare, Automotive and Test and Emulation markets. Revenue was down 7% from the previous quarter based on softness in the communications market.

AMD’s gaming segment, which includes graphics processors for PCs as well as chips for consoles like the Playstation 5 and Xbox Series X/S, reported $1.6 billion in sales, up 16% from a year ago. That was driven by growth in semi-custom chips, offset by lower gaming graphics sales. Revenue declined 10% sequentially primarily due to lower gaming graphics sales.

Last week, AMD’s rival Intel reported Intel reported net income of $500 million, or 13 cents a share, compared with a profit of $1.1 billion, or 28 cents a share, a year earlier, on revenues of $12.9 billion, down 15% from a year ago for the second quarter ended July 1.

During the quarter, AMD showed off its code-named Bergamo and Genoa-X Epyc CPUs. And its fourth-generation Epyc chips were picked up by customers such as AWS, Alibaba, Microsoft Azure and OCI. Cerebras unveiled its Condor Galaxy 1 cloud-based AI supercomputer with more than 70,000 AMD Epyc CPU cores.