Record AMD Data Center Revenue Offsets Big Declines In Radeon And Gaming Sales

Silhouette of AMD CEO Dr. Lisa Su on stage in front of an image of an EPYC processor.
As the era of AI computing begins to unfold in earnest, AMD was able to achieve record sales in its data center business, which grew a whopping 80% year-over-year to $2.34 billion in the first quarter of 2024 (and a more modest 2% sequentially). The big uptick in data center dollars helped AMD weather declining sales in its gaming segment, as both semi-custom and Radeon GPU sales skid in the first quarter.

The totality of AMD's revenue for Q1 2024 came to $5.47 billion, which is down 11% compared to the previous quarter but up a smidgen (2%) compared to the same quarter a year ago. As a result, AMD bolstered its net income to $123 million for the quarter, which is almost a complete 180-degree flip from a $139 million loss in Q1 2023.

"We delivered strong first quarter results with our Data Center and Client segments each growing more than 80% year-over-year driven by the ramp of MI300 AI accelerator shipments and the adoption of our Ryzen and EPYC processors"” said AMD Chair and CEO Dr. Lisa Su. "This is an incredibly exciting time for the industry as widespread deployment of AI is driving demand for significantly more compute across a broad range of markets. We are executing very well as we ramp our data center business and enable AI capabilities across our product portfolio."

AMD slide outlining Q1 2024 segment results.

In addition to record data center dollars, AMD posted strong performance from its Client processor division, which tallied $1.37 billion in revenue for the quarter. That's actually a 6% decrease from the previous quarter, but a substantial 85% increase from a year ago. It comes on the heels of AMD rolling out its Ryzen Pro 8000 series desktop processors with dedicated on-chip AI accelerators.

As for its Gaming segment, revenue slid 48% year-over-year and 33% sequentially to $922 million for the quarter. During an earnings call, AMD Executive Vice President, Chief Financial Officer, and Treasurer Jean Hu pointed to demand for its gaming products as being "quite weak" at the moment, and warned that the second half is expected to reflect an even bigger falloff. However, the decline in sales is not catching AMD off guard.

"First-quarter semi-custom SoC sales declined in line with our projections as we are now in the fifth year of the console cycle," Hu stated.

AMD's semi-custom chips power the Xbox Series X|S and PlayStation 5 (as well as previous generation consoles), both of which released in November 2020. So really it's more like 3.5 years. The point remains, however, that attention has turned to an expected refresh, such as the rumored PlayStation 5 Pro. In addition, seasonal trends dictate that console sales will see a boost in the holiday shopping season later this year.

On the PC side, AMD didn't say a whole lot about its Radeon GPUs, other than confirming that "lower AMD Radeon GPU sales" contributed to the decline. AMD faces stiff competition in PC gaming, with rival NVIDIA having expanded its GeForce RTX 40 series lineup with its Super refresh at the beginning of the year.

Looking ahead, AMD sees "large AI opportunities" to continue driving revenue growth as a whole. The company expects revenue for the second quarter to settle around $5.7 billion, plus or minus $300 million, which would be a 6% year-over-year increase.