Advanced Micro Devices (AMD) reported impressive second-quarter results, fueled by record-breaking revenue in its data center segment. The chipmaker posted revenue of $5.8 billion, surpassing analysts' expectations and marking a 9% increase from the same period last year. Despite a net income miss, with $265 million or 16 cents per share falling short of projections, the company's adjusted earnings of 69 cents per share exceeded estimates.
AMD's success this quarter was primarily driven by its data center revenue, which more than doubled year-over-year to a record $2.8 billion. This surge was largely attributed to the booming demand for AI chips. "The rapid advances in generative AI are driving demand for more compute in every market, creating significant growth opportunities as we deliver leadership AI solutions across our business," said AMD CEO Lisa Su.
Looking ahead, AMD anticipates third-quarter sales of $6.7 billion, slightly above analysts' expectations. Su expressed confidence in the company's future, highlighting the expected strong revenue growth in the second half of the year, led by the demand for Instinct, EPYC, and Ryzen processors. Following the earnings release, AMD shares jumped more than 7%, reaching $138.44 in extended trading.
In comparison, rival Nvidia's shares also saw a 3% increase, while Intel's remained flat. AMD's current top GPU, the MI300X, has already been adopted by major partners and customers, including Microsoft, Meta, Dell, HPE, and Lenovo. The company plans to roll out its next-generation GPUs, the MI325X in Q4 and the MI350X in 2025, with the MI400 expected to hit the market in 2026.
AMD's Client segment, which includes sales of chips for PCs, also performed well, reporting revenue of $1.5 billion. This beat expectations of $1.45 billion and represented a significant increase from $998 million in the same period last year. The PC industry is showing signs of recovery, with worldwide PC shipments increasing 3% year-over-year in the second quarter, according to IDC. This marks the second consecutive quarter of growth after eight quarters of declines.
However, AMD's gaming revenue took a hit, totaling $648 million in Q2, down 59% from $1.5 billion a year earlier. Despite this decline, the figure still managed to beat estimates of $646 million. The gaming industry, like the PC market, has been grappling with a slowdown compared to the surge in sales during the early days of the pandemic. Yet, there is optimism for a rebound as Nintendo prepares to launch its next console, and Take-Two Interactive gears up to release "Grand Theft Auto VI" later in 2024.
AMD is the first of the big three chip companies to report its earnings this quarter, with Intel and Nvidia scheduled to follow suit in August. Investors are closely watching these reports, given the heightened interest in AI and the semiconductor industry's pivotal role in tech innovation.
