AMD Posts Big Data Center And Gaming Gains Despite Earnings Miss And Softening PC Market
AMD didn't quite meet its revenue target for its fiscal third quarter of 2022, though it did still manage to post a 29 percent year-over-year gain to $5.6 billion. Half of that ($2.3 billion) was recorded as a profit, which is a gain of 13 percent from the same quarter a year ago. In a statement, AMD CEO Dr. Lisa Su blamed a "softening PC market and substantial inventory reduction across the PC supply chain" for the company missing its earnings goal. This is in contrast to a 71 percent gain in revenue for Q2.
The current environment is not affecting just AMD. Just a few days ago, rival Intel also attributed a rough quarter in terms of earnings to weakening PC demand and a challenging economy all around, prompting the company to announce it will be taking aggressive cost-cutting measures. Those measures will include some layoffs.
AMD made no such announcement, as its performance in other areas allowed it to still grow its revenue compared to last year. Namely, its data center and gaming divisions helped prop up the company's bottom line nicely.
Source: AMD
"Despite the challenging macro environment, we grew revenue 29 percent year-over-year driven by increased sales of our data center, embedded, and game console products. We are confident that our leadership product portfolio, strong balance sheet, and ongoing growth opportunities in our data center and embedded businesses position us well to navigate the current market dynamics," Dr. Su said.
The data center and gaming divisions were AMD's two biggest earners last quarter, growing 45 percent and 14 percent, respectively, to $1.6 billion each. This was followed by a massive 1,549 percent gain in embedded revenue to $1.3 billion. Meanwhile, AMD's PC client revenue fell 40 percent to $1 billion, ranking it the lowest contributor of the bunch.
Source: AMD
One advantage AMD has when it comes to downturns in the PC market is that it supplies the core hardware and CPUs for the Xbox Series X, Xbox Series S, and PlayStation 5 consoles. And as it applies to the Xbox Series X and PS5, demand remains strong with retailers selling out of units just as fast as they can stock them.
In the data center, AMD notched its tenth consecutive quarter of record processor sales, this time fueled by its 3rd generation EPYC chips and initial shipments of its next-gen 'Genoa' CPUs.
"Cloud revenue more than doubled year-over-year and increased sequentially as multiple
hyperscalers expanded deployments of EPYC processors to power their internal properties and
more than 70 new AMD instances were launched by Microsoft Azure, Amazon, Tencent, Baidu and
others in the quarter," Dr. Su noted in regards to AMD's Q3 earnings report.
Looking ahead, AMD is confident in its product portfolio and roadmap. It just recently launched its Ryzen 7000 series CPUs based on Zen 4 and accompanying AM5 platform, and on November 3 it will formally introduce its next-generation RDNA 3 graphics products.
