Advanced Micro Devices reported strong data center revenue that grew 80% in the first quarter ended March 31, but gaming revenue fell 48%.
Just like at rival Nvidia, AMD’s data center and client segments are driving revenue growth for the company that are far outgrowing the company’s presence in gaming.
Looking forward, AMD expects its Q2 revenue to reach $5.7 billion, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 6% and sequential growth of approximately 4%.
AMD makes the central processing units (CPUs) and graphics processing units (GPUs) used in AI machines as well as graphics cards and PCs.
“We delivered strong first quarter results with our Data Center and Client segments each growing more than 80% year-over-year driven by the ramp of MI300 AI accelerator shipments and the adoption of our Ryzen and EPYC processors,” said AMD CEO Lisa Su, in a statement. “This is an incredibly exciting time for the industry as widespread deployment of AI is driving demand for significantly more compute across a broad range of markets. We are executing very well as we ramp our data center business and enable AI capabilities across our product portfolio.”
In after-hours trading, AMD’s stock is down 2.9% to $153.58 a share.
AMD’s value is $159 billion in overall market capitalization, which is actually higher than rival Intel at $153 billion. In a call with analysts, Su said AMD gained market share in data center chips in the quarter. She also thinks the company is positioned to gain more share as the PC market returns to normal buying patterns.
Analysts expected non-GAAP Q1 earnings per share to come in at 61 cents on revenue of $5.46 billion. GAAP net income for Q1 came in at 7 cents a share, up a loss of 9 cents a share a year ago. On a non-GAAP basis, net income for Q1 was $1.01 billion, or 62 cents a share, up 3% from a year ago.
“AMD started the year strong, delivering record quarterly Data Center segment revenue,” said AMD CFO Jean Hu, in a statement. “In addition, we drove solid gross margin expansion. Moving forward, we are well positioned to continue driving revenue growth and margin improvement while investing in the large AI opportunities ahead.”
AMD reported $1.4 billion in sales for the client group, up 85% from a year ago, driven by AMD Ryzen 8000 processor sales. Revenues were down 6% sequentially.
For the data center, AMD sales were $2.3 billion, up 80% compared to last year. That was due to growth in both AMD Instinct GPUs and 4th Gen AMD Epyc CPUs. Revenue increased 2% sequentially driven by the first full quarter of AMD Instinct GPU sales, partially offset by a seasonal decline in server CPU sales.
Embedded segment revenue was $846 million, down 46% year-over-year customers continued to manage their inventory levels. Revenue decreased 20% sequentially.
Gaming segment revenue was $922 million, down 48% year-over-year, primarily due to a decrease in semi-custom revenue and lower AMD Radeon GPU sales. Revenue declined 33% sequentially.
Last week, AMD’s rival Intel reported first-quarter revenue of $12.7 billion, up 9% year over year (YoY). It is forecasting second-quarter 2024 revenue to be $12.5 to $13.5 billion.
During the quarter, AMD expanded its commercial AI PC processor portfolio with the launch of new AMD Ryzen PRO notebook and desktop processors with leadership AI and compute performance and advanced security.
At the “Advancing AI PC Innovation Summit,” a broad set of partners joined AMD to showcase how AMD is enabling emerging AI experiences. Computer makers including Lenovo and HP showcased over 100 AI experiences already available through AMD platforms, and AMD expects to have more than 150 ISVs developing for Ryzen AI by the end of the year.