Advanced Micro Devices AMD shares surged higher Wednesday trading after the chipmaker posted mixed third quarter earnings and a muted near-term outlook while hyping the potential for its new AI chips heading into 2024.
AMD said non-GAAP earnings for the three months ending in September came in at 70 cents per share, a 4.5% bump from the same period last year that topped Street forecasts by around 2 cents per share. Group revenues, AMD said, rose 4% to $5.8 billion, just ahead of analysts' forecasts of a $5.7 billion tally.
Gaming sector revenue was down 8% from last year to $1.5 billion, while data center was flat at $1.6 billion. The client segment, which includes personal computing, saw a 42% revenue gain to $1.5 billion while embedded segment revenues fell 5% to $1.2 billion.
Looking into the final months of the, AMD said it sees fourth quarter revenue in the region of $6.1 billion, plus or minus $300 million, with gross margins of around 51.5%. LSEG forecasts had the third quarter revenue forecast at $6.4 billion.
AMD's new MI300X chip, however, is likely to draw around $400 million in fourth quarter sales as it looks to challenge Nvidia's NVDA AI-market dominance, while the broader family of MI300 semis are expected to see sales of more than $2 billion over the whole of 2024. The group will host a launch event for the MI300X on December 6.
"Multiple large hyperscale customers committed to deploy Instinct MI300 accelerators, supported by our latest ROCm software suite and the growing adoption of an open hardware-agnostic software ecosystem," CEO Lisa Su told investors on a conference call late Tuesday.
"Based on the rapid progress we are making with our AI road map execution and purchase commitments from cloud customers, we now expect Data Center GPU revenue to be approximately $400 million in the fourth quarter and exceed $2 billion in 2024 as revenue ramps throughout the year," she added. "This growth would make MI300 the fastest product to ramp to $1 billion in sales in AMD history."
AMD shares were marked 7.34% higher in mid-day Wednesday trading to change hands at $105.73 each, a move that would extend the stock's six-month gain to around 18%.
We're most encouraged by the data center results and outlook for both server CPU and GPU but are lowering estimates to reflect weak embedded/gaming," said KeyBanc Capital Markets analyst John Vinh, who lowered his price target by $20, to $140 per share, following last night's earnings.
"We remain Overweight and see the Dec. 6 launch event for MI300X as the next catalyst," he added.
