AMD Q1 disappoints, but new datacenter CPUs and GPUs coming

The chip company reported revenue for Q1 2024 of $5.47 billion, up 2 percent on the same quarter a year ago. The lukewarm reception from the market is said to be because this is about the midpoint of AMD's own earlier estimates.

But the company expects to deliver its "Turin" Epyc processor later this year, along with GPUs to succeed its MI300 accelerator.

For operating income AMD reported just $36 million for the first quarter, but this compares with a loss of $145 million for the same period a year ago. Meanwhile, arch-rival Intel reported an overall loss of $437 million in its Q1 results.

There were some bright spots in the latest figures, however, with AMD's datacenter biz bringing in $2.4 billion, up 80 percent year-on-year, while the Client segment saw revenue increase to $1.4 billion, up 85 percent on last year. But Gaming was down 48 percent to $922 million, and Embedded segment revenue fell 46 percent to $846 million.

The chip biz claimed "record datacenter GPU sales" thanks to its latest MI300 accelerator topping $1 billion since its launch in Q4 last year, and said there are now nearly 900 public cloud instances powered by its Epyc processors, with Amazon, Microsoft and Google all increasing their offerings.

AMD chief Lisa Su said she believed there are signs of improving demand in the enterprise market. Companies need to add more compute capacity while holding down the power needs of their current infrastructure, and this aligns well with Epyc, she claimed.

"Given our high core count and energy efficiency, we can deliver the same amount of compute with 45 percent fewer servers than the competition, cutting initial capex by up to half and lowering annual opex by more than 40 percent," she told analysts on the Q1 earnings call.

Su said that AMD's upcoming Zen 5 "Turin" Epyc processor remains on track to launch later this year, and that the company now expects datacenter GPU revenue to exceed $4 billion in 2024, up from the $3.5 billion forecast in January.

But some Wall Street analysts had been hoping that AMD would aim higher and shoot for about $6 billion in GPU revenue, MarketWatch reported, and this is one reason for its share price dropping by at least 7 percent in after-hours trading.

According to Su, there was strong demand for AMD's latest Ryzen processors in the first quarter, and she claimed there are "clear opportunities" to gain additional commercial PC share based on the performance and efficiency of the Ryzen Pro portfolio.

In line with many others, she believes that 2024 will market growth driven by an enterprise refresh cycle in AI PC adoption, and the company will address this with the launch of its next-generation Ryzen mobile processors codenamed Strix later this year.

"We see AI as the biggest inflection point in PCs since the internet with the ability to deliver unprecedented productivity and usability gains," Su commented, saying that AMD is "working very closely with Microsoft and a broad ecosystem of partners" on this.

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The total addressable market for AI compute is growing extremely quickly, according to Su, who said that AMD foresees it becoming a market worth $400 billion by 2027.

In response to a question about successors to the MI300, Su said these are in development, and that AMD is getting "much closer" to its top AI customers for input on these products.

"They're actually giving us significant feedback on the roadmap and what we need to meet their needs. Our chiplet architecture is very flexible, and so that allows us to make changes to the roadmap as necessary. So we're very confident in our ability to continue to be very competitive," she stated.

Right now, MI300X is in a "sweet spot" for inference, Su claimed, and this will continue with new products due later this year and into 2025.

"That will continue to be a strong spot for us, and then we're also enhancing our training performance and our software roadmap to go along with it. So more details to come in the coming months, but we have a strong roadmap that goes through the next couple of years, and it is informed by a lot of learning in working with our top customers," she explained.

Looking ahead to the second quarter results for 2024, AMD indicated it expects revenue to be approximately $5.7 billion, plus or minus $300 million. The midpoint of this revenue range would represent year-on-year growth of approximately 6 percent, it claimed.

On specific segments, chief financial officer Jean Hu said she expects Datacenter revenue to increase by a double-digit percentage, driven by GPU sales, while Client revenue will increase, Embedded revenue will be flat, and the Gaming segment may see revenue decline by a double-digit percentage. ®