After the stock market closed on October 29th, AMD released its Q3 2024 financial report. The company's third quarter performance met market expectations, with revenue reaching 6.82 billion US dollars, an increase of 18% year-on-year, exceeding LSEG's expected 6.71 billion US dollars. Net profit reached 771 million US dollars, a significant increase of 158% year-on-year, and gross profit margin reached 50%.
However, the company's revenue forecast for the fourth quarter did not meet market expectations. The company's forecast is about 7.5 billion US dollars (fluctuating by 300 million US dollars), with a year-on-year growth of nearly 22%, slightly lower than the market average expectation of 7.55 billion US dollars.
For investors worried about the "AI foam", whether Nvidia and AMD, the star companies whose performance soared due to AI, can keep growing as expected is the key factor affecting market confidence.
As a result, AMD's after hours stock price plummeted by 7.6%.
In fact, AMD's client business related to PC consumer products showed significant growth in the third quarter, with revenue reaching $1.881 billion, a year-on-year increase of 29.5% and a month on month increase of 26%. The company stated that the growth is mainly driven by strong demand for the latest Zen 5 architecture Ryzen processors.
The current PC market is still sluggish. According to the latest report from IDC, global PC shipments in the third quarter of this year decreased by 2.4% year-on-year, and the market needs more time to recover. It is expected to return to single digit growth next year.
For AMD, AI related data center business is currently the focus of attention.
From the third quarter financial report, it can also be seen that AI is currently the main driving force behind AMD's growth. The revenue of the data center department reached 3.5 billion US dollars in the third quarter, a significant increase of 122% year-on-year. According to its introduction, this is mainly due to the increase in sales of the company's AI chip products Instinct GPU and EPYC CPU.
As a highly regarded challenger to Nvidia, AMD has officially released two main AI chips, the Instinct MI300X and Instinct MI325X, to catch up with Nvidia. Among them, MI325X is the latest strongest performance product released this month, directly benchmarking Nvidia's H200 released in November last year. It is planned to be launched in the fourth quarter of 2024.
But the pace of competitors has not slowed down, and Nvidia's new architecture AI GPU B200, which was launched in March this year, also began to be delivered and launched in the fourth quarter. According to the official introduction, the performance of B200 is 2.5 times that of the previous generation H200 GPU, indicating that the competition among AI chip giants is still unprecedentedly fierce.
The main buyers of AI chips in the market are Silicon Valley tech giants such as Google, Meta, Microsoft, Amazon, Tesla, etc. Previously, it was believed that the current AI boom was mainly driven by AI infrastructure projects such as giant investment in data centers. Most of the growth of Nvidia and AMD's data center business came from a small number of major customers. If the number of AI infrastructure being deployed by the giant exceeded the current actual demand, the foam might burst in the future.
AMD CEO Lisa Su responded to this during a conference call, stating that she is "very optimistic about the market" and based on current observations, "customers are actively investing in building the infrastructure needed for all AI workloads".
When an analyst mentioned that "Nvidia is still ahead of AMD in the latest product performance, and how AMD plans to narrow the gap," Su Zifeng responded by saying, "I don't think AMD is still behind Nvidia. In her opinion, according to the company's planned product roadmap, AMD's products have narrowed a significant gap with Nvidia.
Both Nvidia and AMD have accelerated the release of AI chips from "one update every two years" to "one update every year" this year. According to AMD's vision, the MI325X is currently capable of competing head-on with the H200, and next year's MI350 series will start a new round of competition against the B200.
In addition, AMD's gaming and embedded businesses continued to decline due to sluggish market demand. The gaming division's revenue for this quarter was $460 million, a year-on-year decrease of 69%. The company stated that this was mainly due to a decrease in revenue from its semi custom business; The revenue of the Embedded Business Unit for this quarter was 930 million US dollars, a year-on-year decrease of 25%, mainly due to customer adjustments to inventory levels.