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AMD AI chip revenue outlook triggers 7% stock drop

Written by Wed 1 May 2024

Image Credit: Reuters

Advanced Micro Devices (AMD) artificial intelligence (AI) chip sales disappointed investors, leading to a 7% drop in stock during extended trading.

CEO of AMD, Lisa Su, said AMD expects AI chip sales of around £3.2 billion ($4 billion) for 2024, an increase of £400 million ($500 million) compared to last year’s estimates.

Enterprises are embracing generative AI, leading to increased investment in AI server chips. This surge in demand has impacted traditional server semiconductors, a significant revenue source for AMD. However, these conventional processors struggle to efficiently manage the complex tasks associated with AI.

“Overall AI demand has exceeded anyone’s expectations in 2024,” said Su.

AMD’s CPUs are sometimes paired with AI chips, but the balance heavily tilts towards more advanced AI processors over CPUs. NVIDIA leads the market with approximately 80% share in AI server semiconductors.

AMD expects a second-quarter gross margin of approximately 53%, slightly exceeding the estimated 52.9%. Revenue from its data centre business rose 80% to £1.8 billion ($2.3 billion), with anticipated growth in revenue from AMD’s MI300 series AI processors compensating for weaknesses in the traditional server market, as analysts had predicted.

In October, AMD announced the signing of a definitive agreement to acquire Nod.ai to expand the company’s open AI software capabilities.

Nod.ai develops software technology that accelerates the deployment of AI solutions optimised for AMD Instinct data centre accelerators, Ryzen AI processors, EPYC processors, Versal SoCs, and Radeon GPUs to AMD.

In September, AMD announced the availability of its new AMD EPYC 8004 Series processors, completing the 4th Gen AMD EPYC CPU family of workload-optimised processors.

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Written by Wed 1 May 2024

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