Advanced Micro Devices (AMD) last Tuesday, February 4, published information about its earnings for the fourth quarter of 2024, which exceeded preliminary expectations.
The revenue of the mentioned company, which is headquartered in Santa Clara, California, for the last quarter of the past year was recorded at the $7.65 billion mark. This indicator showed an increase of 24% compared to the figure for the same period in 2023. At the same time, the LSEG consensus forecast stipulated that the company’s revenue for the fourth quarter of 2024 would be fixed at the $7.53 billion mark.
Adjusted earnings per share for the mentioned period was $1.09. The LSEG consensus forecast predicted that this figure would be $1.08.
The company’s revenue for the entire year 2024 was recorded at the $25.78 billion mark. This indicator has shown growth which was 14% year-on-year.
The company expects its revenue for the first quarter of the current year to be fixed at the approximately $7.1 billion mark, give or take $300 million. At the mid-point of the revenue range, this represents year-over-year growth of nearly 30% and a sequential decline of about 7%. The LSEG consensus forecast predicted that AMD’s revenue for the first quarter of 2024 would be $7 billion.
The company also expects its non-GAAP gross margin for the mentioned period to reach approximately 54%.
The company’s net income for the fourth quarter of 2024 was recorded at the $482 million mark. This indicator showed a decrease of 28% year-on-year.
It is worth noting that AMD’s adjusted earnings per share excluded items such as acquisition costs, inventory loss at contract manufacturers, and restructuring charges.
Lisa Su, the company’s chief executive officer, told investors on an earnings call that AMD believes it will see strong double-digit percentage revenue and EPS growth in 2025.
Currently, the most important unit of the firm is its business selling chips for data centers. Recently, there has been an upward dynamic in this area of the company’s activities. The mentioned growth is related to the intensification of demand for graphics processing units for artificial intelligence.
AMD’s revenue in data center sales for the fourth quarter of 2024 was a record $3.9 billion. This indicator increased by 69% year-on-year. The company noted that in this case, a significant impact factor was the strong ramp of AMD Instinct graphics processing unit shipments and growth in AMD EPYC central processing unit sales. The mentioned products compete with Intel’s processors.
Despite the growth of the company’s specified business, this result was below experts’ preliminary expectations. Analysts polled by FactSet predicted that data center sales for the fourth quarter of 2024 would amount to $4.14 billion. Against the background of a negative discrepancy between the final results and expectations, the value of AMD shares fell by about 6% in extended trading on Tuesday. On Wednesday, February 5, this indicator continued its movement on the downward trajectory. After markets opened, the value of AMD’s shares fell by 11%. According to preliminary estimates, if the mentioned dynamic continues, the company may lose more than $19 billion of its market capitalization. It is worth noting that in 2023, the value of the shares of the firm has more than doubled. The corresponding dynamic was related to the expectation that AMD would be able to benefit significantly from the active development of the artificial intelligence industry and the rising popularity of AI as a technology.
The company’s Data Center segment generated a record $12.6 billion in revenue for the entire year 2024. This indicator showed an increase of 94% year-on-year. Of the mentioned amount, $5 billion was from Instinct graphics processing units for artificial intelligence.
AMD is far behind the market leader of graphics processing units Nvidia, which is one of the main beneficiaries of the so-called machine intelligence boom on a global level and has a market capitalization exceeding $3 trillion. The market capitalization of the company, headed by Lisa Su, is $174.84 billion. At the same time, AMD is developing competitive graphics processing units for data centers. In this context, it is worth mentioning the MI300X, which has gained the attention of major infrastructure buyers such as Meta and Amazon.
Lisa Su stated that the company is entering a steep long-term growth trajectory, helped by the rapid scaling of its franchise for data center artificial intelligence from revenue of over $5 billion in 2024 to tens of billions of dollars of annual revenue in the coming years.
AMD’s business segment related to the sale of chips for personal computers, laptops, and other individual computers generated record revenue of $2.3 billion for the fourth quarter of 2024. This indicator increased by 58% year-on-year. For the entire year 2024, the revenue of the mentioned segment of the company’s business amounted to a record $7.1 billion. The growth of this indicator was 52% compared to the figure for 2023. The company noted that the strong demand for AMD Ryzen processors on desktop and mobile was a factor in the impact on the specified dynamic.
Revenue of the firm from activities related to the sale of graphics processing units for gaming totaled $563 million for the fourth quarter of 2024. This indicator decreased by 59% year-on-year. For the whole of 2024, the revenue of the mentioned segment of the company’s activities reached $2.6 billion. This indicator showed a decrease of 58% year-on-year. As part of commenting on the mentioned dynamic, the company reported that the main impact factor was a drop in semi-custom revenue.
AMD’s embedded business segment earned $923 million in the fourth quarter of 2024. This indicator fell by 13% year-on-year. Commenting on the mentioned result, the company stated that end-market demand continues to be mixed. For the entire year 2024, AMD’s specified business segment generated revenue of $3.6 billion. This indicator showed a decrease of 33% year-on-year. The company, commenting on the result for the whole of 2024, noted that customers are normalizing their inventory levels.
AMD has stated that from about the middle of 2025, it will have better products. The company expects its sales to grow in the second half of the current year against the corresponding background. AMD also predicts that in the first half of 2025, its revenue from artificial intelligence chips will be the same as in the last six months of 2024.
Lisa Su expects the personal computer market to increase by a percentage in the mid-single digits. Share gains mean that AMD’s PC unit will grow at a faster pace than the market as a whole.
Ben Barringer, technology analyst at Quilter Cheviot, said that the firm may still be taking market share from Intel in the central processing unit side of things, but it remains a long way behind Nvidia and is struggling to catch up when it comes to graphics processing units. The expert also noted that investors want the company to take the fight to Nvidia, but for now, it is very much struggling to break the moat and disrupt its market position.
Bank of America analysts said that as Nvidia continues to outperform and custom chips gain more traction at hyperscalers, AMD may find it difficult to win the artificial intelligence narrative, despite its strong growth levels.
Also on Wednesday, it became known that the European Union’s antitrust regulators will decide by March 12 whether to clear AMD’s bid to acquire server manufacturer ZT Systems as part of the deal worth $ 4.9 billion. The relevant information is contained in the European Commission filing.
AMD announced the proposed acquisition of the server manufacturer in August last year. The deal is expected to strengthen the company’s portfolio of artificial intelligence chips and hardware. The acquisition of ZT Systems will also help improve AMD’s ability to compete with Nvidia.
If the European Union executive concludes that the deal contains certain risks, a four-month investigation may be launched.
ZT Systems is making artificial intelligence infrastructure for the world’s largest hyperscale computing companies. The brand cooperates with such technology giants as Microsoft and Meta.
As we have reported earlier, AMD Launches New AI Chip.
