Q4 2024 Summary
Published Feb 7, 2025, 7:58 PM UTC- AMD's Data Center business is expected to grow strong double digits in 2025, with both the server product line and the Data Center GPU product line contributing significantly. The MI350 series launch has been pulled into mid-year due to very strong customer demand, improving competitiveness.
- AMD's Client segment is outperforming the market, with record desktop sell-out and strong mobile performance in Q4 2024. AMD is bullish on growing the Client segment in 2025 due to a strong product portfolio and new commercial PC offerings.
- AMD expects gross margin to improve in the second half of 2025, driven by the Data Center being the fastest growth driver, which will drive the gross margin to step up in the second half.
- Data Center GPU Growth Slowing in First Half of 2025: AMD's management indicated that the Data Center GPU business will be roughly flat in the first half of 2025 compared to the second half of 2024, due to a product transition and timing of deployments. This lack of growth in a key segment could be a concern for investors seeking continued momentum in AI and Data Center markets.
- Increased Competition in Server CPU Market: There are concerns about aggressive pricing from competitors in the server CPU market. If competitors become more aggressive on pricing to regain share, it may impact AMD's ability to grow its server CPU business in line with expectations and could pressure margins.
- Flat Gross Margins in First Half of 2025: AMD expects gross margin to remain at 54% in the first half of 2025, consistent with Q4 2024, with improvement not anticipated until the second half of the year when the Data Center segment grows faster. This may indicate that higher-margin products are not contributing significantly in the near term.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +24% | Strong momentum in Data Center (+69% YoY) and Client (+58% YoY) offset headwinds in Gaming and Embedded. Higher average selling prices in the Client segment also contributed to revenue growth. |
Data Center | +69% | Expanded HPC and AI deployments drove higher demand for EPYC CPUs and Instinct GPUs. Strategic cloud partnerships further supported growth. |
Client | +58% | Increased demand for Ryzen processors, supported by improving PC market conditions, boosted shipments and ASPs. Market share gains in notebooks also contributed significantly. |
Gaming | -59% | Aging console cycle and lower semi-custom product demand led to a sharp revenue drop. Softer discrete GPU sales added downward pressure. |
Embedded | -13% | Customer inventory normalization reduced shipments compared to last year. Weaker communications demand outweighed modest gains in industrial and aerospace. |
Operating Income (EBIT) | +155% | Higher Data Center and Client sales lifted gross margins, driving operating profit growth. Continued R&D investments in AI tempered some of the gains. |
Net Income | -28% | Even though revenue and operating income rose, increased interest expenses and one-time charges weighed on net income. Tax-related impacts also contributed to the decline. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q1 2025 | no prior guidance | ~$7.1B ± $300M (30% YoY, -7% QoQ) | no prior guidance |
Non-GAAP Gross Margin | Q1 2025 | no prior guidance | 54% | no prior guidance |
Non-GAAP Operating Expenses | Q1 2025 | no prior guidance | ~$2.1B | no prior guidance |
Non-GAAP Other Net Income | Q1 2025 | no prior guidance | $24M | no prior guidance |
Non-GAAP Effective Tax Rate | Q1 2025 | no prior guidance | 13% | no prior guidance |
Diluted Share Count | Q1 2025 | no prior guidance | ~1.64B shares | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q4 2024 | ~$7.5 billion ± $300 million | $7,658 million | Met |
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Data Center GPU Growth
Q: How will Data Center GPU revenue progress in 2025?
A: Lisa Su expects strong double-digit growth in the Data Center GPU business in 2025, with the second half being stronger due to the earlier-than-planned ramp of the MI350 series, now pulled into mid-2025 because of strong customer demand. The first half of 2025 Data Center revenue is expected to be consistent with the second half of 2024. -
Server CPU Competition
Q: Will competitor pricing impact server CPU growth prospects?
A: Jean Hu is confident in growing the server CPU business despite competitive pricing, highlighting AMD's strong product lineup, including Turin, Genoa, and Milan, offering the best TCO for customers. She expects growth in both units and ASPs while continuing to gain market share. -
Gross Margin Outlook
Q: What is the gross margin outlook for 2025?
A: Jean Hu guided for a gross margin of 54% in Q1 2025, driven by a consistent revenue mix with strong year-over-year growth in both Data Center and Client businesses. She anticipates gross margins to remain at this level in the first half, improving in the second half as Data Center becomes the fastest growth driver. -
Impact of New AI Models
Q: Does DeepSeek's innovation affect AMD's market opportunity?
A: Lisa Su believes that innovations like DeepSeek are positive for AI adoption, enabling training and inference with less infrastructure. She is bullish on the overall cycle and expects increased AI compute deployment. She sees ASICs as a smaller part of the TAM, with GPUs offering programmability amid evolving AI algorithms. -
Client Business Strength
Q: Are there concerns about inventory buildup in the Client segment?
A: Lisa Su sees no substantial inventory buildup, attributing strong Q4 performance to high adoption of new products. The desktop segment saw the highest sell-out in many years, and notebooks benefited from new AI PCs launched by OEM partners. AMD is bullish on Client growth prospects in 2025. -
Networking in AI Infrastructure
Q: How is AMD addressing AI networking requirements?
A: Lisa Su emphasized that networking is crucial for AI solutions, with AMD investing significantly in this area. AMD is working with partners on Ethernet and developing an in-house AI NIC with the Pensando team. They are deploying full rack solutions at MI350 and MI400 levels. -
Server CPU Market Outlook
Q: How does AMD view the server CPU market in 2025?
A: Lisa Su anticipates a strong server market in both cloud and Enterprise segments in 2025. Enterprise refresh cycles are resuming, and cloud vendors are updating data centers. AMD's expanded portfolio across workloads supports continued market share gains. -
Data Center GPU Performance
Q: Will Data Center GPU revenue decline sequentially in early 2025?
A: Lisa Su clarified that while the Data Center segment was up 9% sequentially in Q4, with server up slightly more and Data Center GPU slightly less, she expects the first half of 2025 revenue to be roughly flat compared to the second half of 2024. Sequential changes depend on deployment timing. -
Data Center Growth Dynamics
Q: Why is Data Center sequential growth slowing in near term?
A: Lisa Su explained that after significant growth in 2024, AMD is transitioning products in early 2025. The introduction of MI350 is crucial, and they continue gaining new customers and deployments. -
Enterprise Server Momentum
Q: Did Enterprise server sales grow sequentially in Q4?
A: Lisa Su confirmed double-digit sequential growth in server business during Q4, with growth in both cloud and Enterprise. Investments in go-to-market strategies have converted POCs to volume deployments. She expects a strong 2025 for server CPUs across all workloads.