AMD, a leading technology company, has recently reported strong performance across its product and service offerings. The company’s main offerings include microprocessors for desktop, laptop, and server use, graphics processors, server and enterprise solutions, and embedded solutions.
In the Data Center segment, AMD experienced significant growth in the fourth quarter of 2023, achieving record revenue. The company gained server CPU revenue share, with sales accelerating in both the Cloud and Enterprise segments. AMD’s Instinct GPUs have been well-received, with customer deployments continuing to accelerate and MI300 now tracking to be the fastest revenue ramp of any product in AMD’s history. The company also launched MI300X GPUs, which deliver leadership generated AI performance and have received overwhelmingly positive customer response.
In the Client segment, AMD launched its latest generation Ryzen 8000 series notebooks and desktop processors in January, including Ryzen 8000 G-series processors, which are the industry’s first desktop CPUs with an integrated AI engine. Millions of AI PCs powered by Ryzen processors have shipped to date, and Ryzen CPUs currently power more than 90% of AI-enabled PCs in the market. The company is planning for the PC TAM to grow modestly in 2024 and is focusing on delivering its long-term roadmaps with leadership Ryzen AI NPU capabilities to enable differentiated experiences in PCs.
In the Gaming segment, AMD revenue declined due to lower semi-custom revenue but grew in the Client segment due to increased sales of Radeon GPUs. The company expanded its Radeon 7000 GPU series with the launch of new RX 7600 XT Series enthusiast desktop GPUs, which offer leadership price performance for 1080p gaming. AMD also launched open source FidelityFX Super Resolution 3 software, which can deliver significantly higher gaming frame rates on both GPUs and APUs.
In the Embedded segment, revenue decreased as customers focused on reducing inventory levels. However, AMD expanded its embedded portfolio with new leadership solutions for key markets, including Versal Prime adaptive SoCs for the aerospace, test and measurement, health care and communications markets, which deliver industry-first support for DDR5 memory and increased DSP capability compared to previous generations. The company also launched Ryzen embedded processors with unmatched performance and features for industrial automation, machine vision, robotics, and edge server applications.
Looking ahead, AMD is planning for the PC TAM to grow modestly in 2024, as it ramps its current products and extends its AIPC leadership. The company is also launching its next wave of Zen 5 CPUs. In the Data Center segment, AMD continues to gain traction with its Instinct GPUs and is planning for the market for Data Center AI accelerators to grow to approximately $400 billion in 2027. The company’s long-term roadmaps include delivering leadership Ryzen AI NPU capabilities in PCs to enable differentiated experiences, as well as accelerating the adoption of AI across multiple industries and applications.
AMD, a leading provider of high-performance computing solutions, is looking forward to an exciting future as it continues to innovate and deliver industry-leading products in the Data Center, Client, Embedded, and Gaming markets. One of the major upcoming milestones for the company is the ramp of its MI300 accelerators, which is already exceeding expectations due to strong customer demand and robust supply chain partnerships. The MI300 family, which combines high-performance CDNA 3 architecture with industry-leading memory bandwidth and capacity, is expected to be the fastest revenue ramp of any product in AMD’s history.
Another major upcoming product is the Turin family of EPYC Processors, which is a drop-in replacement for existing 4th Gen EPYC platforms that extends AMD’s performance, efficiency, and TCO leadership with the addition of its next-gen Zen 5 core, new memory expansion capabilities, and higher core counts. Customer response to MI300 has been overwhelmingly positive, and internal and end customer validation work is progressing to plan.
Looking ahead, the company plans to continue investing in research and development to stay at the forefront of technology and maintain a competitive advantage over its main competitors, including Intel, NVIDIA, and Qualcomm. AMD also plans to expand its product portfolio and form partnerships with key players in emerging markets such as cloud computing, automotive, and the Internet of Things (IoT).
However, the company faces several risks in the future. These include macroeconomic conditions, supply chain disruptions, and competition from other technology companies. To mitigate these risks, AMD plans on maintaining a strong balance sheet, diversifying its revenue streams, and continuing to invest in research and development to stay competitive. Overall, AMD is confident in its ability to deliver strong financial performance and drive significant revenue growth in the medium-to-long term.
Q: Aaron Rakers asked about the actual revenue for Data Center GPU in Q4 and the seasonal decline in server sales offset by strong Data Center GPU ramp in Q1. A: “Can you help us appreciate what seasonal is defined as, as we think about the server business into the 1Q guide? And can you help us on a relative basis the $400 million of Data Center GPU revenue that you expected in Q4. What did that ultimately fall off to be?” Lisa Su responded, “We were very pleased with performance that we saw in the fourth quarter. It was always going to be a very back-end quarter weighted as we were ramping the product and we saw MI300A, our HPC product actually ramped very well. And then we saw MI300X. The AI product actually exceeded our expectations based on strong customer demand, the way the qualifications went and then the ramp–manufacturing ramp. So, we were over $400 million for that business in the fourth quarter. And then, going into the first quarter, as we look at the business, server seasonality, call it, something around high-single-digit, low-double-digit. There are also some other pieces of the Data Center business. The key piece of it is we had originally expected the ramp to be a little bit more shallow of our MI300X and what we’re seeing now is the supply chain is operating really well, and the customer demand is strong. And so, we will see MI300X increase as we go into the first quarter, and things are going relatively well.”
Q: Timothy Arcuri asked about the milestones or mileposts AMD is marching towards in the $400 billion TAM for 2027 and if the consumer GPU share of 20% is a reasonable bogey. A: “How the heck did you come up with that number? I’d be interested to hear a little bit more about are we talking about systems and accelerator cards? Are we talking about just the silicon? Are we talking about full servers? And what kind of unit assumptions? Any kind of thing that you can give us on-market sizing or what gives you the visibility so early into this generative AI trend to give a precise number of three years out?” Lisa Su responded, “We expect units to grow substantially double-digit percentage. But you should also expect that content is going to grow. So, if you think about how important memory and memory capacity is as we go forward, you can imagine that we’ll see acceleration of the roadmaps. In terms of what’s in that TAM, it really is accelerator TAM. So, within accelerators, there are certainly GPUs and there will also be some ASICs that are other accelerators that are in that TAM. As we think about sort of the different types of models from smaller models to fine-tuning of models, to the largest large language models, I think you’re going to need different silicon for those different use cases. But from our standpoint, GPUs are still going to be the sort of the compute element of choice when you’re talking about training and inferencing on the largest language models.”
Investing in AMD presents an exciting opportunity due to its strong position in the Data Center market, particularly in AI. The company’s MI300 GPU is gaining traction with a growing number of customers, leading to a strong ramp in revenue. AMD’s partnerships with major cloud providers and enterprise customers give it a competitive edge, and its multi-generational conversations indicate a long-term growth potential. Furthermore, the company’s CPU portfolio, including the Ryzen 8000 series, is also showing strong growth as it delivers industry-leading compute performance and energy efficiency.
However, there are also risks to consider. The mixed demand environment, especially in the Embedded and Gaming segments, is causing revenue declines. The company expects Embedded revenue to remain soft in the first half of the year, and Gaming revenue to decline significantly due to a combination of lower semi-customer revenue and inventory at customers. Additionally, Intel’s roadmap and manufacturing progress could potentially impact AMD’s competitive position in the future. Investors should carefully weigh these risks against the potential long-term growth opportunities before making a decision to buy AMD stock.
