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Highlights:
AMD reported 18% year-over-year revenue growth in Q3 2024, reaching $6.8 billion.
The company saw a 122% increase in data center revenue, driven by strong demand for AI chips.
AMD's guidance indicates a potential 22% revenue growth in the current quarter, signaling positive momentum.
Advanced Micro Devices (NASDAQ:AMD) has faced a tough year in 2024, with its stock down 4% so far, while the broader semiconductor sector has seen significant gains. The company's third-quarter results, released on October 29, revealed strong growth in revenue and earnings. However, Wall Street’s response was lukewarm, as concerns about AMD’s progress in the artificial intelligence (AI) chip market weighed on investor sentiment.
Despite the stock’s sharp drop following earnings, a closer look at the quarterly performance suggests that the sell-off may have been an overreaction. AMD’s revenue for Q3 2024 increased by 18% year-over-year, reaching $6.8 billion. Adjusted earnings per share rose by 31%, exceeding analysts’ estimates. A record $3.5 billion in data center revenue, driven by demand for AMD’s AI-focused GPUs, was a highlight. AMD now anticipates generating at least $5 billion in data center GPU revenue for 2024, up from previous projections. This marks a substantial improvement from earlier in the year when AI chip revenue was expected to be much lower.
The company has also gained traction with its MI300 series AI accelerators, which are already being deployed by major tech companies like Microsoft and Meta. AMD’s data center GPU business remains smaller than that of Nvidia, but with a rapidly growing market for AI chips, AMD is well-positioned to expand its share. The company forecasts the AI GPU market could reach $500 billion by 2028, and even a modest portion of this market could significantly boost AMD’s revenue.
Additionally, AMD’s Epyc server CPUs, which are in high demand for AI workloads, continue to power key services for major companies. With strong demand for both its GPUs and CPUs, AMD is set for continued growth. The company's guidance for the next quarter suggests further acceleration, with revenue expected to grow 22% year-over-year.
