Chip giant AMD (Nasdaq: AMD) saw its net profit more than triple in the third quarter, but its performance by business was mixed, with weak performance guidance in the fourth quarter.
However, AMD predicts that the AI (Artificial Intelligence) MI300, launched in the fourth quarter, will become the fastest product in the company's history to reach sales of $1 billion.
After hours on October 31st US time, AMD released its third quarter financial report as of September 30th. After two consecutive quarters of revenue decline, the company's revenue in the third quarter finally rose, increasing by 4% year-on-year to $5.8 billion, higher than the market expectation of $5.71 billion, and the median of the company's revenue guidance range was $5.7 billion; Under GAAP, the net profit was $299 million, a year-on-year increase of 353%; Adjusted earnings per share under GAAP were $0.18, a year-on-year increase of 350%; Under non GAAP, net profit was $1.135 billion, a year-on-year increase of 4%, and adjusted earnings per share was $0.7, a year-on-year increase of 4%.
In terms of performance guidance, AMD expects revenue to reach between $5.8 billion and $6.4 billion in the fourth quarter, with an estimated $6.1 billion, a year-on-year increase of 9%. However, this expectation was lower than the market's previous expectation of $6.4 billion.
On that day, AMD's stock price fell slightly by 0.6% after hours, and the company's stock price has risen by 52.08% so far this year.
AMD Q3 GAAP and Non GAAP Performance Overview. Source: AMD Financial Report
AMD CEO Su Zhifeng said, "The company has achieved strong revenue and profit growth, mainly driven by our Ryzen 7000 series PC processors and record breaking server processor sales." Su Zhifeng emphasized that the data center business has shown significant growth momentum, thanks to the strong performance of the EPYC CPU portfolio products and the accelerated shipping speed of the Instact MI300 processor, Capable of supporting multiple deployments between companies and large-scale cloud computing providers, enterprises, and AI customers.
AMD CFO Jean Hu also stated that it is expected that the growth of data center business in the fourth quarter will partially offset the decline in gaming sales and further weakening of embedded market demand.
From a business perspective, AMD's performance in the third quarter was mixed. The performance of the data center business is stable, with significant growth in the client business, while the gaming and embedded product businesses have both experienced a significant decline.
The revenue of the data center in the third quarter was $1.6 billion, unchanged from the same period last year. At the data center and AI technology conference in June this year, AMD announced the addition of two new workload optimization processors to the fourth generation Xiaolong (EPYC) CPU product portfolio. The sales of Xiaolong CPU product portfolio showed growth in the fourth quarter, driving data center revenue to increase by 21% month on month. However, a decrease in sales of adaptive system chip (SoC) products in the data center offset this growth.
AMD is one of the few companies in the AI chip field controlled by NVIDIA that can produce high-end GPUs that can be used for training and deploying AI. In June of this year, AMD launched two AI accelerators, MI300A and MI300X. At the post financial report conference call, AMD is expected to ship MI300A and MI300X GPU products in the fourth quarter, further driving data center business growth. The news reversed the downward trend of AMD's post market stock price.
Su Zifeng stated in a conference call that multiple large-scale cloud computing companies have promised to deploy MI300, which is expected to make it the fastest product in company history to reach $1 billion in sales. "We now expect GPU revenue in the fourth quarter of the data center to reach about $400 million, and as revenue gradually increases, it will exceed $2 billion for the entire year of 2024
In the client business, driven by the sales growth of Ruilong mobile processors, the company's client business revenue in the third quarter was $1.5 billion, a year-on-year increase of 42% and a month on month increase of 46%.
On the other hand, in the gaming business, despite the support of Radeon graphics cards, due to a decrease in revenue from semi customized products, the revenue of the gaming business in the fourth quarter still decreased by 8% year-on-year to $1.5 billion. AMD has lowered its sales forecast for the gaming business in the fourth quarter. In the embedded product business, due to poor performance in the communication environment, this portion of revenue also decreased by 5% year-on-year to $1.2 billion.
In addition, during the conference call, Su Zifeng also mentioned the company's acquisition of AI open-source software company Nod.ai on October 10th this year, stating that Nod.ai will help AMD accelerate the optimization and deployment of AI solutions for its products: "I think we have all seen the growth of generative AI workloads, and in fact, people are just beginning to truly apply it as enterprise business productivity