Q3 2024 Summary
Published Jan 31, 2025, 4:49 PM UTC- AMD's Data Center GPU business is exceeding expectations, with revenue now expected to exceed $5 billion in 2024, up from prior guidance of $4.5 billion, driven by strong customer milestones, ramping of the Instinct product portfolio, and broadening customer engagements.
- AMD is closing the competitive gap in AI accelerators with a strengthening product roadmap, including the MI325X and upcoming MI350 series, receiving positive customer feedback and expected to compete well with the latest offerings from competitors.
- AMD's Data Center business now accounts for over 50% of their revenue, with continued sequential growth expected, driven by strong momentum in both Enterprise and Cloud segments, and opportunities to gain market share, including in underrepresented regions like China.
- Competitive concerns over AI GPU development timeline: Investors are worried that AMD's MI series GPUs remain approximately one year behind the industry leader's products, which may hinder AMD's ability to gain market share until this gap is closed .
- Underrepresentation in the Chinese server market: AMD admits being underrepresented in the China server market, potentially impacting their ability to capture growth opportunities in this significant market .
- Modest growth expected in Gaming and Embedded segments: AMD anticipates only modest sequential growth in their Gaming and Embedded segments, indicating potential slower performance compared to their Data Center and Client segments .
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q3 2024 | ~$6.7B ± $300M | 6,819 | Met |
Sequential Revenue Growth | Q3 2024 | ~15% | 16.9% (from Q2 ’24 revenue 5,835To Q3 ’24 revenue 6,819) | Beat |
Year-over-Year Revenue Growth | Q3 2024 | ~16% | 17.6% (from Q3 ’23 revenue 5,800To Q3 ’24 revenue 6,819) | Beat |
Non-GAAP Gross Margin | Q3 2024 | ~53.5% | ~53.6% (calculated from Revenue 6,819– COGS 3,167 → 3,652 ÷ 6,819 ≈ 53.6%) | Met |
Embedded Segment Revenue | Q3 2024 | Expected to increase sequentially | 927(up from 861In Q2 ’24) | Met |
Gaming Segment Revenue | Q3 2024 | Expected to decline by a double-digit percentage | 462(down from 648In Q2 ’24, ~29% sequential decline) | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Data center GPU revenue growth and guidance expansions | Exceeded $1B in Q2 2024 with raised guidance to over $4.5B. Grew from $2.3B in Q1 2024. Over $400M early beat in Q4 2023 grew to $3.5B guidance for 2024. | Raised 2024 GPU revenue guidance to exceed $5B on strong Instinct shipments and customer wins. | Consistently bullish, with revenue guidance continually moving upward. |
AI and HPC accelerator market potential | Expected $400B–$500B TAM by 2027–2028 across calls. Strong belief AI is a “generational” computing transition. | Sees annual TAM growth of >60% to $500B by 2028; a huge opportunity reflecting the size of the entire 2023 semiconductor market. | Recurring bullish view; each quarter reaffirms a rapidly expanding AI/HPC market. |
MI300, MI325, MI355 GPU product launches | MI300 ramp in Q2 2024 passed $1B revenue mark; MI325X planned for late 2024; MI350 series to debut in 2025. MI300 introduced in Q1 and Q4 2023 as AMD’s fastest ramping product. No prior mention of MI355 before Q3 2024. | MI300 ramp contributed to higher GPU guidance; MI325X launched with 20% higher inferencing performance vs. competition; MI355 slated for late 2025. | Evolving product roadmap, with increasing performance claims and new launches (MI355) emerging in Q3. |
Server CPU share gains with EPYC lineup (Zen 4, Zen 5, Turin) | Growth noted every quarter: 4th Gen EPYC success in Q2 , double-digit growth Q1 , record share in Q4 2023. | Strong share gains; Data Center reached 52% of AMD revenue partly due to EPYC. Turin (Zen 5) launched with 130+ performance records. | Continuously bullish, with each quarter citing more adoption and record share. |
Gaming segment revenue softness and lower margins | Q2: Down 59% YoY. Q1: Down 48% YoY. Q4 2023 also saw declines amid aged console cycle. | Revenue down 69% YoY to $462M; margin at 2% vs. 14% a year ago. Weakness from reduced semi-custom demand and upcoming RDNA 4 transition. | Consistently negative; softness persists due to console cycle maturity and inventory. |
Supply chain constraints for AI GPU products | Q2: Still tight, will remain so through 2025. Q1: Not supply-capped at $4B guidance, but near-term demand outstripping supply. Q4 2023: Capacity secured for $3.5B+ shipments. | Conditions remain tight, but AMD feels more confident in capacity for upcoming growth into 2025. | Ongoing challenge, though AMD highlights improved planning and strong partnerships. |
Embedded segment revenue declines | Q2: Down 41% YoY. Q1: Down 46% YoY. Q4 2023: Down 24% YoY. | Declined 25% YoY to $927M, but up 8% sequentially; inventory normalization cited. | Repeating weakness, though Q3 had slight sequential improvement. |
Competition from Intel adopting advanced chiplet designs | Addressed in Q4 2023: AMD acknowledged Intel’s tile strategy, emphasized AMD’s fourth chiplet generation and confidence in its roadmap. No mention in Q1–Q2 2024. | No mention in current period. | Not discussed in Q3, was last noted in Q4 2023. |
ARM-based PC competition in the client segment | Q2: Lisa Su indicated AMD competes seriously against ARM-based PCs but remains confident in its positioning. No mentions in Q1, Q4 2023. | No mention in current period. | Absent in Q3, previously acknowledged only in Q2. |
Shifting sentiment around AI capabilities and performance | Q2: Strong optimism on AI roadmaps. Q1: AI considered a major growth driver. Q4 2023: “once-in-a-generation transition”. | Improved MI300 inferencing +80% training performance; broad customer adoption (Microsoft, Meta) building confidence. | Increasingly positive every quarter, with each generation showing stronger AI momentum. |
Data center surpassing 50% of AMD’s business | Approached 50% in Q2 ; was over 40% in Q1. Combined Data Center/Embedded above 50% in Q4 2023. | Data Center at 52% of total revenue in Q3, driven by Instinct and EPYC. | Uphill trend as DC grows into AMD’s main revenue driver. |
Customer adoption and trust building in the AI GPU market | Q2: Broader MI300 traction with hyperscalers. Q1: Rapid MI300 adoption by >100 AI customers. Q4 2023: Strong ramp and partnerships for MI300. | Emphasized that customer trust takes time; strong progress with new milestones (e.g., MI300 success) and deep engagements with large cloud vendors. | Steadily growing confidence around AMD’s AI GPU solutions. |
Potential margin headwinds from client-focused products | Not specifically mentioned in prior quarters. | Cited as a potential GM headwind due to lower consumer margins. | Newly mentioned as a cautionary factor in Q3. |
Large AI accelerator TAM | Mentioned $400B–$500B TAM range in Q1–Q4 2023. | TAM at $500B by 2028; more than 60% annual growth. | Ongoing bullish expansion of forecasted AI TAM. |
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Data Center GPU Revenue Growth
Q: What drove the $500 million increase in 2024 Data Center GPU outlook?
A: AMD raised its 2024 Data Center GPU revenue guidance from exceeding $4.5 billion to exceeding $5 billion due to strong Q3 performance in the Instinct product portfolio, completion of important customer milestones, and ramping above initial expectations. -
2025 Data Center GPU Outlook
Q: How is AMD thinking about Data Center GPU growth in 2025?
A: AMD is optimistic about 2025, citing significant investment in AI infrastructure and a strengthening product portfolio, including launching MI325 later this quarter and MI355 in the second half of next year. Customer engagements are broadening with both existing and new cloud and enterprise customers optimizing workloads on AMD Instinct. -
Gross Margin Outlook
Q: What are the factors impacting gross margin into 2025?
A: Gross margins are expected to improve driven by the Data Center business, which accounted for over 50% of revenue in Q3. The recovery in Embedded will also aid margins. However, expansion in the Client business, focused on consumer, which is below corporate average margins, poses a headwind. Operational efficiency and economies of scale are expected to further enhance gross margins. -
Supply Chain Capacity for GPUs
Q: How is AMD managing supply for MI300 and MI325 GPUs into 2025?
A: AMD has effectively ramped its supply chain, ensuring capacity despite tight market conditions, contributing to higher Q3 revenue in the Instinct business. The company has planned for significant growth in 2025 and feels confident in its overall supply chain capabilities. -
Data Center Segment Growth
Q: What is driving sequential revenue growth in Q4?
A: The largest contributor to sequential revenue growth is the Data Center business, now over 50% of AMD's revenue in Q3 and expected to continue growing in Q4. The Client segment is also performing well, driven by desktop Zen 5 and notebook AI PC launches. Other segments like Gaming and Embedded are expected to be more modest. -
Competitive Position in AI GPUs
Q: How does AMD address the perception of being behind competitors in AI GPUs?
A: AMD believes it has closed much of the gap with competitors. MI325 will compete well with H200, and the MI350 series will compete with Blackwell. The company emphasizes that market constraints in new product generations impact all players and that its portfolio allows for easier data center integration. Customer feedback is positive on AMD's strengthening roadmap. -
EPYC and Server CPU Growth
Q: How is AMD's EPYC server CPU business performing?
A: The EPYC business is strong, with improved market conditions and large cloud customers adding capacity. The Zen 4 portfolio was very strong in Q3, and the ramp of Zen 5 Turin has begun. AMD has a robust product stack and sees strength in the server market, enhancing AI opportunities. -
PC Market Outlook
Q: What is AMD's outlook on the PC market and potential risks?
A: AMD expects some seasonality into the first half of next year but feels positive about the PC market in 2025, anticipating mid-single-digit growth. Catalysts include AI PCs and Windows 10 end of support. The company has its strongest PC portfolio ever and sees opportunities for growth in both consumer and enterprise segments. -
Customer Ramp and Revenue Lumpiness
Q: Should we expect lumpiness in Data Center GPU revenue next year?
A: Revenue may be lumpy due to the timing of large customer deployments, which vary by quarter based on customer build-outs and infrastructure preferences. Despite this, AMD feels good about the overall growth trajectory into 2025. -
Data Center GPU Gross Margins
Q: How will gross margins from Data Center GPUs improve?
A: Currently, gross margins on Data Center GPUs are below corporate average, but as revenue ramps, AMD expects margins to improve. In the longer term, the data center business tends to exceed corporate average margins. The focus is on driving long-term growth and market presence while enhancing gross margins over time.