Advanced Micro Devices Inc (AMD) Q3 2024 Earnings Call Highlights: Record Revenue Driven by ...

GuruFocus News
5 min read

In This Article:

  • Revenue: $6.8 billion, up 18% year-over-year.

  • Gross Margin: 54%, an increase of 250 basis points year-over-year.

  • Earnings Per Share (EPS): $0.92, up 31% year-over-year.

  • Data Center Revenue: $3.5 billion, up 122% year-over-year.

  • Client Segment Revenue: $1.9 billion, up 29% year-over-year.

  • Gaming Segment Revenue: $462 million, down 69% year-over-year.

  • Embedded Segment Revenue: $927 million, down 25% year-over-year.

  • Operating Expenses: $1.96 billion, up 15% year-over-year.

  • Operating Income: $1.7 billion, representing a 25% operating margin.

  • Cash from Operations: $628 million.

  • Free Cash Flow: $496 million.

  • Inventory: $5.4 billion, increased by $383 million sequentially.

  • Share Repurchase: $250 million, repurchasing 1.8 million shares.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Advanced Micro Devices Inc (NASDAQ:AMD) reported a record third-quarter revenue of $6.8 billion, an 18% increase year-over-year, driven by strong data center and client processor sales.

  • The data center segment revenue increased by 122% year-over-year to a record $3.5 billion, with significant growth in EPYC CPU and Instinct GPU sales.

  • Gross margin expanded by 2.5 percentage points, and earnings per share increased by 31% year-over-year.

  • AMD's client segment revenue grew by 29% year-over-year, driven by strong demand for Zen 5 notebook and desktop processors.

  • The company raised its 2024 data center GPU revenue guidance from $4.5 billion to over $5 billion, reflecting strong customer demand and supply chain improvements.

Negative Points

  • Gaming segment revenue declined by 69% year-over-year to $462 million, primarily due to decreased semi-custom sales as Microsoft and Sony reduced channel inventory.

  • Embedded segment revenue decreased by 25% year-over-year to $927 million, with ongoing softness in the industrial market.

  • Despite strong growth in data center and client segments, AMD's gaming and embedded segments experienced revenue declines, partially offsetting overall growth.

  • The company faces a tight supply environment, which could impact its ability to meet growing demand, particularly in the data center GPU business.

  • AMD's client business remains more consumer-weighted, which could present challenges in balancing ASPs and unit growth amid market fluctuations.

Q & A Highlights

Q: Lisa, you took up your '24 outlook by $500 million for the data center GPU business. What drove this change, and how are you thinking about growth in 2025 for Instinct between cloud and enterprise customers? A: We had a strong quarter for the data center, especially for the Instinct product portfolio, completing important customer milestones and ramping above expectations. We raised guidance for the year to exceed $5 billion. For 2025, we see significant investment in AI infrastructure, with our product portfolio strengthening and customer engagements broadening, particularly with cloud and enterprise customers.

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