AMD’s Q3 revenues hit $5.8B, up 4% as PC CPUs grow again

Advanced Micro Devices reported that revenue in its third quarter was $5.8 billion, up 4% from a year earlier and 8% sequentially as as new products, AI chips and data center tech grew in the quarter.

AMD makes the processors and graphics processing units (GPUs) used in AI machines, are riding on high demand for AI. AMD said PC client revenue recovered in the quarter, hitting $1.5 billion in revenues, up 42% from a year ago. Gaming revenues, however, were down 8% in the quarter.

“We delivered strong revenue and earnings growth driven by demand for our Ryzen 7000 series PC processors and record server processor sales,” said AMD CEO Lisa Su, in a statement. “Our data center business is on a significant growth trajectory based on the strength of our EPYC CPU portfolio and the ramp of Instinct MI300 accelerator shipments to support multiple deployments with hyperscale, enterprise and AI customers.”

In after-hours trading, AMD’s stock is down 4.4% to $94.11 a share. AMD’s value is $159 billion in overall market capitalization, which is actually higher than rival Intel at $153 billion. In a call with analysts, Su said AMD gained market share in data center chips in the quarter. She also thinks the company is positioned to gain more share as the PC market returns to normal buying patterns.

Analysts expected Q3 earnings per share to come in at 64 cents on revenue of $5.37 billion. GAAP net income for Q3 came in at $299 million, or 18 cents a share, up 353% from a year ago. On a non-GAAP basis, net income for Q3 was $1.13 billion, or 70 cents a share, up 4% from a year ago.

“We executed well in the third quarter, delivering year-over-year growth in revenue, gross margin and earnings per share,” said AMD CFO Jean Hu, in a statement. “In the fourth quarter, we expect to see strong growth in Data Center and continued momentum in Client, partially offset by lower sales in the Gaming segment and additional softening of demand in the embedded markets.”

For the fourth quarter of 2023, AMD expects revenue to be approximately $6.1 billion, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 9% and sequential growth of approximately 5%. Non-GAAP gross margin is expected to be approximately 51.5%.

AMD reported $1.5 billion in sales for the client group, up 42% from a year ago, driven primarily by higher Ryzen mobile processor sales. Revenue grew 46% sequentially driven by an increase in AMD Ryzen 7000 Series CPU sales. The group returned to profitability.

For the data center, AMD sales were flat at $1.6 billion compared to last year. That was due to growth in 4th Gen AMD Epyc CPU sales, offset by a decline in adaptive system-on-chip (SoC) data center products.
Revenue increased 21% sequentially as customer adoption of 4th Gen AMD Epyc CPUs accelerated during the quarter. And AMD Instinct MI300A and MI300X GPUs are on track for volume production in the fourth quarter to support deployments with several leading HPC, cloud and AI customers.

Embedded segment revenue was $1.2 billion, down 5% year-over-year primarily due to a decrease in revenue in the communications market. Revenue decreased 15% sequentially due to inventory correction at customers in several end markets.

Gaming segment revenue was $1.5 billion, down 8% year-over-year, primarily due to a decline in semi-custom revenue, partially offset by an increase in AMD Radeon GPU sales. Revenue declined 5% sequentially due to lower semi-custom sales. That could mean that game console sales slowed a bit, as we are in the fourth year of the console cycle.

Last week, AMD’s rival Intel reported that its third-quarter revenue was $14.2 billion, down 8% from a year earlier. Third-quarter earnings per share (EPS) were 7 cents a share, while non-GAAP EPS was 41 cents a share.

Cloud adoption of AMD Epyc processors continues to grow significantly, with nearly 100 new instances from Microsoft Azure, AWS, Oracle and others available for preview and general access, including new AWS instances powered by 4th Gen AMD Epyc CPUs that deliver leadership performance and energy efficiency. Data center GPUs saw new traction for the next generation of products, Su said.

During the quarter, AMD expanded the 4th Gen Epyc CPU portfolio with the launch of the AMD Epyc 8004 Series processors, purpose built to deliver exceptional energy efficiency and performance for cloud services, intelligent edge and telco.

AMD also made significant progress powering pervasive AI across the cloud, edge and end point devices:
AMD completed the acquisition of open-source AI software expert Nod.ai, expanding the company’s open AI software capabilities. Nod.ai has developed an industry-leading software technology that accelerates the deployment of AI solutions optimized for AMD Instinct data center accelerators, Ryzen AI processors, EPYC processors, Versal SoCs and Radeon GPUs.

AMD announced the AMD Ryzen Threadripper PRO 7000 WX-Series and Ryzen Threadripper 7000 processors, delivering outstanding performance for the most demanding desktop platforms. Ryzen Threadripper PRO 7000 WX-Series processors will be available later this year to DIY customers, SI partners and through OEM partners including Dell Technologies, HP and Lenovo.

AMD has $16 billion in current assets and $7 billion in liabilities. That’s a pretty good financial condition compared to many years ago.

AMD announced plans to invest approximately $400 million over the next five years to expand research, development and engineering operations in India, including the addition of approximately 3,000 new engineering roles by the end of 2028.

There are more than 50 laptop designs powered by Ryzen AI chips.