Advanced Micro Devices (AMD) -) posted modestly better-than-expected second quarter earnings Tuesday and said it was on track to ramp up production of its new-generation chips to meet a surge in AI demand.
AMD said non-GAAP earnings for the quarter came in at 57 cents per share, a 45.7% decline from the same period last year that topped Street forecasts by a penny. Group revenues, AMD said, fell 18.2% to $5.359 billion, just ahead of analysts' forecasts of a $5.31 billion tally.
Gaming sector revenue was down 4% from last year to $1.6 billion, while data center fell 11% to $1.3 billion. The client segment, which includes personal computing, saw a 54% revenue decline to $998 million while embedded segment revenues rose 16% to $1.5 billion.
Looking into the current financial year, AMD said it sees first quarter revenue in the region of $5.7 billion, plus or minus $300 million, with gross margins of around 51%. Refinitv forecasts had the third quarter revenue forecast at $5.82 billion.
The group's AI potential, however, as well as its leadership in data center chips is likely to form the bulk of its near-term outlook, with CEO Lisa Su forecasting the overall market to grow to around $150 billion by 2027.
The new chips are expected to ship in volumed by the fourth quarter of this year, with reports suggesting Amazon (AMZN) -) and Microsoft (MSFT) -) could be potential customers.
“We delivered strong results in the second quarter as 4th Gen EPYC and Ryzen 7000 processors ramped significantly,” said Su. “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 and are on-track to launch and ramp production of MI300 accelerators in the fourth quarter,” she added.
AMD shares were marked 4.2% higher in after-hours trading immediately following the earnings release to indicate a Wednesday opening bell price of $122.50 each.
