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Highlights
Advanced Micro Devices (AMD) is set to report its Q3 FY’24 results, with projected revenues of $6.73 billion, reflecting a 16% year-over-year increase, and earnings of approximately $0.92 per share.
The company's growth is expected to be driven by strong demand for AI chips and a recovery in the PC market, despite a slight decrease in global PC shipments.
AMD's GPU sales are anticipated to surge due to the rising demand for AI-related workloads, with significant contributions from new product launches in the data center segment.
Advanced Micro Devices (NASDAQ:AMD), a key player in the semiconductor industry, is anticipated to announce its Q3 FY’24 results toward the end of October. Analysts project that AMD will report revenues of $6.73 billion, marking a 16% increase compared to the same quarter last year, while earnings per share are expected to reach approximately $0.92, reflecting a 30% year-over-year growth.
Over the past four years, AMD stock has exhibited volatility, with annual returns fluctuating significantly, including gains of 57% in 2021, losses of 55% in 2022, and a remarkable increase of 128% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, which comprises 30 stocks, has demonstrated less volatility and has outperformed the S&P 500 each year during the same period.
In the previous quarter, Q2 2024, AMD's sales for the client segment amounted to $1.5 billion, up 49% year-over-year, driven primarily by the popularity of AMD Ryzen 8000 Series processors. However, the global PC market remains mixed, with Gartner reporting a 1.3% year-over-year decline in worldwide PC shipments. Despite this, AMD may see improved growth through market share gains and potential inventory replenishment by vendors after significant drawdowns in 2023.
On the server side, AMD’s fourth-generation EPYC CPUs are expected to continue gaining market share against Intel, which has faced delays in advancing its technology. Additionally, demand for AMD’s GPUs is projected to expand significantly, fueled by the surge in AI applications. AMD has introduced new chips, such as the MI300X, aimed at large language model training and inference in generative AI workloads. The company anticipates data center GPU revenue will exceed $4.5 billion in 2024, indicating robust growth.
With AI chip sales increasing substantially, AMD’s financial outlook remains strong. The company has reported adjusted gross margins rising by 300 basis points to 53%, with guidance for approximately 53.5% for Q3. Although AMD's trading multiple is high at 46 times consensus 2024 earnings, this reflects the ongoing recovery in the PC market and increased demand for AI applications. Additionally, the recent cut in benchmark interest rates by the U.S. Federal Reserve could lower financing costs for data center builders, potentially boosting capital spending in the sector. Current valuations place AMD stock at about $168 per share, suggesting room for growth from current levels. Further updates on the company's performance will be available following the Q3 results announcement.
