AMD overcame export restrictions on its
Instinct MI308 data center GPU to still post its best quarter ever, with revenue increasing 34% year-over-year and 3% sequentially to nearly $7.7 billion. It also saw a giant increase in net income, which skyrocketed 229% year-over-year and 23% sequentially to $872 million, driven by all-time high sales of both server and PC chips.
"We delivered strong revenue growth in the second quarter led by record server and PC processor sales," said Dr. Lisa Su, AMD Chair and CEO. "We are seeing robust demand across our computing and AI product portfolio and are well positioned to deliver significant growth in the second half of the year, driven by the ramp of our AMD Instinct MI350 series accelerators and ongoing EPYC and Ryzen processor share gains."
The export ban on Instinct MI308 is notable because it led to around $800 million in inventory and related charges, AMD said. Additionally, AMD could potentially see a better-than-expected third or fourth quarter results, as its current outlook doesn't reflect any revenue from Instinct MI308 shipments to China. According to AMD, the U.S. government is currently reviewing its license applications.
Even without Instinct MI308 sales, AMD's data center segment still posted strong results, growing 14% year-over-year to $3.2 billion, primarily from its EPYC processors. However, that figure is also down 12% sequentially, resulting in an operating loss of $155 million for the quarter. This is attributable to the aforementioned export restrictions.
Meanwhile, AMD's client and gaming division grew 69% year-over-year and 23% sequentially to $3.62 billion, resulting in $767 million in operating income. During an earnings call, Dr. Su credited record client CPU sales and robust demand for AMD's semi-custom game console SoCs and Radeon GPUs for the segment's growth in Q2.
"We delivered record desktop channel CPU sales as Ryzen processors consistently topped the best-selling CPU lists at major global e-tailers throughout the quarter. We also expanded our Zen 5 desktop portfolio with the launch of our latest Threadripper processors that feature up to 96 cores and deliver up to double the performance of the competition in many popular content creation and design workloads," Dr. Su added.
Finally, AMD's embedded segment added another $824 million in Q2 revenue (down 4% year-over-year and flat sequentially), for $275 million in operating income.
Looking ahead, Dr. Su says there is a "clear path to scaling" AMD's AI business to tens of billions of dollars in annual revenue. She also expressed excitement over AMD's next-generation MI400 series, calling it a "giant step forward" on the company's roadmap.
In the more immediate future, AMD noted in its
latest earnings report that it anticipates Q3 revenue to settle in at $8.7 billion, plus or minus $300 million, and not including any MI308 shipments. Even so, the knee-jerk reaction to AMD's results and concerns over export restrictions has led to the company's share price falling 8% in early morning trading.