AMD gives soft fourth-quarter guidance, but expects to sell $2 billion of AI chips next year

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  • AMD reported third-quarter earnings on Tuesday.
  • The company is one of the few chipmakers capable of making the kind of high-end graphics processing units (GPUs) needed to train and deploy generative AI models.
  • AMD said AI GPU sales could exceed $2 billion in 2024.

AMD reported third-quarter earnings on Tuesday that beat analyst expectations, though the chipmaker issued a weaker-than-expected forecast.

Here's how the company did versus LSEG (formerly Refinitiv) consensus estimates for the quarter ended in September:

  • EPS: 70 cents, adjusted, versus 68 cents expected
  • Revenue: $5.8 billion, versus $5.7 billion expected

For the fourth quarter, AMD said it expects about $6.1 billion in sales, while analysts were looking for revenue of $6.37 billion.

AMD is one of the few chipmakers capable of making the kind of high-end graphics processing units (GPUs) needed to train and deploy generative artificial intelligence models. That market is dominated by Nvidia. AMD said its forthcoming AI chips, the MI300A and MI300X, are "on track" for volume production in the current quarter.

The stock initially dropped about 4% in extended trading but recovered after the company gave a rosy 2024 forecast for its AI chip business.

"We now expect data center GPU revenue to be approximately $400 million in the fourth quarter and exceed $2 billion in 2024 as revenue ramps throughout the year," AMD CEO Lisa Su said on the earnings call.

Net income in the third quarter rose to $299 million, or 18 cents per share, from $66 million, or 4 cents per share a year ago. Revenue increased 4% from $5.6 billion a year earlier.

Data center, which includes AMD's server processors and AI chips called GPUs, reported $1.6 billion in sales, flat from a year earlier. AMD said its sales of server CPUs grew. The chipmaker added it expects strong growth in its data center business in the fourth quarter.

"We would like to be a significant player in this market," Su said.

On the call, Su also mentioned recent AI acquisitions and improvements in the company's AI software suite.

"I think we all see the growth in generative AI workloads and the fact is we're just at the very early innings of people truly adopting it for enterprise business productivity applications," Su said.

Revenue in AMD's Client group, which includes sales from PC processors, rose 42% year over year to $1.5 billion, driven by PC chips.

Last week, chief rival Intel reported third-quarter earnings that beat expectations for profit and sales, but still showed a revenue decline year over year.

AMD's embedded segment revenue was off 5% to $1.2 billion, which the company blamed on a weak communications market. That includes parts for networking as well as the company's field programmable gate array unit that it acquired when it bought Xilinx.

Sales in AMD's gaming segment declined 8% to $1.5 billion, because of fewer "semi-custom" chip sales. That's what the company calls its business that makes processors for consoles like Sony's PlayStation 5.

WATCH: Wedbush's Matt Bryson reacts to AMD's Q3 earnings

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