AMD Earnings Spike As Massive AI Data Center Revenue Offsets Gaming Slump
The AI chip boom is benefiting the bottom line of big tech firms, and further proof of that comes by way of AMD's latest earnings report. For the second quarter of 2024, AMD generated over $5.8 billion in revenue, which is a gain of 7% sequentially and 9% year-over-year, and increased its net income to $265 million, representative of a massive 115% rise compared to the previous quarter and even bigger 881% jump from last year.
"We delivered strong revenue and earnings growth in the second quarter driven by record Data Center segment revenue," said AMD Chair and CEO Dr. Lisa Su. "Our AI business continued accelerating and we are well positioned to deliver strong revenue growth in the second half of the year led by demand for Instinct, EPYC and Ryzen processors. The rapid advances in generative AI are driving demand for more compute in every market, creating significant growth opportunities as we deliver leadership AI solutions across our business."
Indeed, AMD saw its Data Center revenue jump to a record high of $2.8 billion for an impressive 21% sequential gain and more than double compared to last year (up 115%). According to AMD, the record performance is primarily attributable to a steep ramp of its Instinct GPU shipments, followed by a double-digit percentage jump in 4th Gen EPYC CPU sales.
During an earnings call, Dr. Su revealed that AMD's Instinct MI300 crossed over the $1 billion quarterly revenue mark for the first time, fueled in part by Microsoft expanding the use of MI300X accelerators for GPT-4 Turbo and various Copilot services. The CEO also essentially said that AMD is selling its Instinct accelerators just as fast as it can procure them.
"We ramped up supply significantly exceeding $1 billion in the quarter... But I will say that the overall supply chain is tight and will remain tight through 2025," Dr. Su said. "So, under that backdrop, we have great partnerships across the supply chain. We've been building additional capacity and capability there. And so, we expect to continue to ramp as we go through the year.
The strong performance in the Data Center helped offset a decline in AMD's Gaming division, which saw declines of 30% sequentially and 59% year-over-year from $1.58 billion to $648 million in the second quarter of 2024. It was the only division to see a sequential decline, with Data Center, Client, and Embedded segments all posting gains (though Embedded revenue was down year-over-year).
AMD pinned the bulk of the blame for softer Gaming sales on a a decrease in semi-custom revenue. These are the chips that go into dedicated game consoles like the Xbox Series X|S and PlayStation 5, both of which released nearly four years ago. Assuming AMD powers the next generation of game consoles from Microsoft and Sony, we would expect to see a jump in Gaming division sales at some point.
Meanwhile, Dr. Su said revenue increased for PC graphics cards, with sales of the company's Radeon RX 7000 and 6000 series improving. Likewise, it will be interesting to see how the eventual Radeon RX 8000 series launch combined with next-gen console releases impacts AMD's Gaming division.
As for Client CPU sales, AMD saw revenue gains of 9% sequentially and 49% year-over-year to $1.49 billion for the quarter on strong Ryzen chip sales. This bodes well for future quarters as well, considering that AMD's Ryzen 9000 series CPUs based on Zen 5 are not yet available at retail.
Looking ahead, AMD stated in its latest earnings report that it anticipates $6.7 billion in Q3 revenue, give or take $300 million. Should it be right on the money, that figure would represent sequential and year-over-year growth rates of 15% and 16%, respectively.
