Q2 2024 Summary
Published Jan 10, 2025, 5:10 PM UTC- AMD's MI300 GPUs are experiencing strong demand, with MI300 revenue exceeding $1 billion in Q2 and expected to ramp further in Q3 and Q4. This demonstrates AMD's growing presence in the AI market, particularly in AI GPUs for hyperscalers and OEM customers.
- AMD is expanding its AI GPU roadmap, planning to launch MI325 later this year and the MI350 series next year, which will be very competitive with Blackwell solutions. This positions AMD to capture significant growth opportunities in the rapidly expanding AI and data center markets.
- Strong Data Center business growth is driving significant gross margin expansion, with Data Center revenue nearly 50% of total revenue and gross margins increasing to 53% in Q2. This indicates improving profitability and operational leverage for AMD.
- AMD faces strong competition in the AI hardware market, particularly from established competitors with advanced software ecosystems, making it challenging to carve out market share.
- Supply chain tightness for key components like HBM3 memory is expected to continue through 2025, which may limit AMD's ability to meet demand for its MI300 GPU accelerators.
- AMD's gross margins are under pressure, with guidance indicating a decline in incremental gross margin for Q3; additionally, significant investments in software (such as the acquisition of Silo AI) may impact profitability.
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MI300 Revenue Ramp
Q: How will MI300 revenues ramp this year and next?
A: Lisa Su stated that MI300 revenue will continue to ramp in the third and fourth quarters, with positive progress and customer adoption. They expect MI300 to contribute significantly to AMD's growth, and are on track with their annual targets. Looking into next year, she highlighted the expansion of their roadmap with MI325 launching later this year and the MI350 series next year, expressing confidence in the AI market's potential. -
Data Center CPU Growth
Q: What are your expectations for EPYC server CPU growth?
A: Lisa Su is very pleased with EPYC's progress, noting broad adoption across cloud and increased traction in enterprise and third-party cloud instances. She anticipates continued growth in the second half, supported by market improvements and the launch of Turin, which will contribute to revenue. Overall, she sees AMD's ability to continue gaining share in the server market as a significant growth driver. -
Gross Margin Outlook
Q: Why is Q3 gross margin guidance lower?
A: Jean Hu explained that while they expect continued gross margin expansion driven by Data Center growth, other factors like better seasonality in the PC business, which is more consumer-focused, and a gradual recovery in the Embedded business are impacting the margin trajectory. She reaffirmed confidence that over the long term, MI300 will be accretive to the corporate average gross margin. -
MI300 Supply Constraints
Q: Is MI300 supply constrained for the annual forecast?
A: Lisa Su acknowledged that the overall supply chain is tight and will remain so through 2025. However, AMD has made great progress, ramping supply significantly and exceeding $1 billion in the second quarter. They have a line of sight to continue increasing supply in the second half, working closely with supply chain partners. -
AI Investment Outlook
Q: How will AI monetization concerns affect AMD's position?
A: Lisa Su believes the industry will continue to invest heavily in AI due to its vast potential. She asserted that for the market size, there will be multiple solutions, and AMD has demonstrated a strong roadmap and the ability to partner with customers. She is confident in AMD's strong technology and partnerships to capitalize on the large AI opportunity. -
MI300 Training vs. Inference
Q: Are you gaining traction in MI300 training applications?
A: Lisa Su indicated that while early MI300 deployments have largely been for inference, they also have customers performing training. She expects both inference and training to be growth opportunities for AMD, noting that GPUs remain the architecture of choice for large language models. -
Software Investments for MI300
Q: What's the challenge in ramping MI300's next wave of customers?
A: Lisa Su explained that the ROCm software capability has improved substantially, making it easier for customers to get up and running on MI300. They've invested in software assets like the acquisition of Silo AI with 300 scientists and engineers to expand their customer base. She emphasized their ongoing investment in software to build out scale for the significant opportunity. -
Rack-Level Infrastructure Gap
Q: When will AMD close the rack-level infrastructure gap?
A: Lisa Su acknowledged that systems are becoming more complex and customers need help with integration. She mentioned that AMD has all the necessary components, including Infinity Fabric and networking capabilities through the acquisition of Pensando. AMD plans to invest more in system-level solutions to help customers get to market faster. -
Client Business and AI PC
Q: How is AMD positioned for AI PCs amidst ARM competition?
A: Lisa Su is very pleased with their Client business, noting strong products and viewing it as a good revenue growth opportunity. They're launching Zen 5 desktops and notebooks, expecting above-seasonal growth due to strong product launches. Regarding ARM-based competition, she believes AMD's products are well positioned and takes all competition seriously. -
Revenue Guidance Breakdown
Q: How does Q3 guidance split among segments?
A: Lisa Su indicated that with Gaming down double digits, Data Center is the largest contributor to growth, followed by Client, and Embedded with single-digit sequential growth. Both Instinct GPUs and server CPUs will see significant growth in the Data Center segment. -
MI300 Journey vs. EPYC
Q: Is MI300's journey similar to EPYC's earlier days?
A: Lisa Su agreed, stating that MI300 is a long-term play with parallels to the EPYC journey. They've reached key milestones with hardware in volume at multiple hyperscalers and improved software maturity. She emphasized the importance of long-term engagements and investments across multiple generations to open up future opportunities.