tl;dr
AMD reported Q2 earnings with adjusted EPS of 48 cents, slightly below estimates, and revenue of $7.69 billion, exceeding expectations. Net income rose to $872 million from $265 million a year earlier. Data center revenue grew 14% to $3.2 billion, driven by AI workload demand. Gaming and client segm...
Advanced Micro Devices (AMD) reported Q2 earnings that missed analyst estimates, causing its stock to dip about 5% in after-hours trading. The chipmaker posted adjusted earnings per share (EPS) of 48 cents, slightly below the 49 cents expected, while revenue came in at $7.69 billion, exceeding the anticipated $7.42 billion. Looking ahead, AMD forecasted Q3 sales of $8.7 billion, plus or minus $300 million, beating consensus estimates of $8.3 billion.
AMD's net income surged to $872 million, or 54 cents per share, from $265 million, or 16 cents per share, a year earlier. This growth reflects robust demand, notably in its data center segment, which saw revenue rise 14% year-over-year to $3.2 billion. AMD’s CPUs for servers are gaining traction alongside its GPUs, fueled by the increasing importance of AI workloads in cloud infrastructure.
In gaming and client segments, AMD enjoyed impressive gains: revenue soared 69% year-over-year to $3.6 billion. Laptop and desktop CPU sales (Client) climbed 57% to $2.5 billion, aligning with market expectations, driven largely by demand for AMD Ryzen Zen 5 processors. Meanwhile, gaming revenue jumped 73% to $1.1 billion, boosted by sales of custom game console chips and gaming GPUs.
AMD remains the second-largest GPU supplier for AI after Nvidia but is carving out its niche with competitive new products. The company unveiled AI chip innovations like the Instinct MI400 and MI350, targeting training and inference workloads. CEO Lisa Su highlighted that seven of the top ten AI model builders use AMD’s Instinct chips and that discussions are underway with large customers to build clusters powered by AMD GPUs. OpenAI’s CEO has also committed to using AMD’s newest GPUs.
AML faced challenges from U.S. export controls restricting sales of its MI308 AI chips to China, costing the company an estimated $800 million in the quarter. However, license applications are under review, and shipments may soon resume. The export control costs significantly impacted AMD’s adjusted gross margin, which stood at 43% instead of a potential 54% without those constraints.
AMD’s CEO Lisa Su exudes a clear vision and strong leadership, distinguishing the company’s path from competitors like Intel. Despite the short-term market reaction, AMD’s positioning in AI, gaming, and data center markets signals a strategic opportunity. With bold innovation and steady execution, AMD is poised to capitalize on the evolving semiconductor landscape.