AMD Stock Rises on Solid Earnings and 'Strong Progress' on AI Chips

For the June quarter, AMD (ticker: AMD) reported second-quarter adjusted earnings of 58 cents a share, compared with Wall Street’s consensus estimate of 57 cents, according to FactSet. Revenue came in at $5.36 billion for the period, slightly above analysts’ expectations of $5.3 billion.

The chip maker’s data-center unit revenue was down 11% from a year earlier in the June quarter, while revenue in its client PC business fell by 54% versus the prior year. AMD’s gaming business declined by 4% in the same period. Overall revenue was down by 18% year-over-year.

For the current quarter, AMD gave a revenue forecast of $5.7 billion at the midpoint of a range, which was slightly below the consensus of $5.8 billion.

The modest financial results were overshadowed by AMD’s positive commentary on AI products.

“Our AI engagements increased by more than seven times in the quarter as multiple customers initiated or expanded programs supporting future deployments of Instinct accelerators [data center chips often used for AI applications] at scale,” CEO Lisa Su said in the release. “We made strong progress meeting key hardware and software milestones to address the growing customer pull for our data center AI solutions.”

On a conference call with investors and analysts, Su said AMD expects the market for AI accelerators in data centers to reach over $150 billion by 2027.

AMD shares rose 4.4% initially following the release to $122.74.

Su said AMD’s widely anticipated MI300 accelerators are on track to launch during the fourth quarter. The MI300, a data center graphics processing unit, is intended to be well-suited for AI projects and AI applications.

Write to Tae Kim at tae.kim@barrons.com