\#AMD’s MI300 chips will be its growth engine for the future and the key reason for buying this stock. While I don’t believe it will get close to Nvidia’s near monopolistic market share of 80% there is ample room for more competitors and AMD will benefit from the AI boom as well.
It recently upped its guidance for 2024 for artificial intelligence-related revenue to $3.5B up from $2B previously.
$AMD Chief Executive Dr. Lisa Su said she had “good confidence” the company will be able to exceed the $3.5B figure this year and the $1.5B run-rate for the coming fourth-quarter. $1.5Bn run rate implies $6Bn in annual sales.
However, based on Citi analyst estimates, AMD is likely to generate $5B this year and $8B next year from the MI300 – they believe that Microsoft (MSFT) and Meta (META) are the largest customers for the MI300, which was unveiled in December to much fanfare. And with the average selling price at roughly $10,000 for Microsoft and $15,000 or more for other customers, it’s possible AMD is purposefully underestimating sales figures, possibly on supply concerns?
For Q4-2023 AMD results were in line with expectations
EPS: $0.77 per share, adjusted, versus $0.77 per share expected
Revenue: $6.17 billion, versus $6.12 billion expected
Data Center revenue $2.28Bn in line V $2.29 expected.
Guidance was light:
Q1-24 $5.4Bn in sales, plus or minus $300 million, V $5.73 Bn expected.
Flat data center revenue with server chip declines to be offset by AI GPU sales. We saw weak data center revenue from Intel, this is definitely some cannibalization and likely to continue, till AI GPU starts taking a larger share of the pie.
Client Group – The recovery in PC’s helped AMD’s client group, which rose 62% year-over-year to $1.46 billion in sales, which the company said was boosted by recent chip launches.
Gaming, which includes “semi-custom” processors for Microsoft Xbox and Sony Playstation consoles, fell 17%. AMD blamed slower console sales, and said it expected semi-custom revenue to decline by a “significant” double-digit percentage in the current quarter. This is a low margin business and drags AMD’s overall margins.
AMD’s embedded segment, which includes chips for networking, reported $1.1 billion in sales, down 24% on an annual basis.
