AMD(US:AMD) Soochow Securities·2024-07-31 23:31Investment Rating - Buy (Maintained) [1] Core Views - AMD's Q2 2024 performance highlights strong growth in AI computing products, with accelerated shipments of MI300 series and increased revenue expectations for data center GPUs [2][3] - The company is expected to release new computing power products annually, with MI 325X series launching in Q4 2024 and MI350 series based on CDNA 4 architecture in 2025 [3] - AMD's client business continues to grow, driven by Ryzen series processors, while embedded business shows a sequential recovery [4] - The company maintains a strong position in the AI computing market, with ongoing investments in software and network interconnectivity [4] Financial Performance - Q2 2024 revenue reached $5.84 billion, up 9% YoY, with Non-GAAP gross profit of $3.10 billion, up 16% YoY, and Non-GAAP net income of $1.13 billion, up 19% YoY [2] - Data center business revenue was $2.83 billion, up 21% QoQ, with operating profit of $740 million, up 37% QoQ, and operating margin improving by 15 percentage points to 26% [3] - Client business revenue was $1.49 billion, up 49% YoY, with operating profit of $90 million, turning from a loss to profit [4] - Embedded business revenue was $860 million, down 41% YoY, with operating profit of $350 million, down 54% YoY [4] Product and Market Outlook - MI300 series products achieved over $1 billion in revenue for the first time in a single quarter, driving growth in data center GPU revenue expectations to $4.5 billion for 2024 [3] - AMD is enhancing its AI software capabilities, with partners adopting ROCm and MI300X-supported Llama 3.1 models, including a 405 billion parameter version [3] - The acquisition of Silo AI is expected to accelerate the optimization of training and inference solutions [3] - The company is set to release Ryzen AI 300 series processors for AI PCs, with leading 50 TOPs processing power, supported by major OEMs like Asus, HP, and Lenovo [4] Financial Projections - Revenue is projected to grow from $22.68 billion in 2023 to $38.67 billion in 2026, with a 36% YoY growth in 2025 [2] - Non-GAAP net income is expected to increase from $4.30 billion in 2023 to $12.49 billion in 2026, with a 70% YoY growth in 2025 [2] - Non-GAAP PE ratios are forecasted at 35.5x for 2024, 21.0x for 2025, and 18.0x for 2026 [4] Market Data - Closing price: $138.44 [5] - Market capitalization: $223.76 billion [5] - Price-to-book ratio: 3.98x [5] Key Financial Ratios - Non-GAAP net margin is expected to improve from 18.97% in 2023 to 32.21% in 2026 [8] - ROE is projected to increase from 7.70% in 2023 to 16.86% in 2026 [8] - EV/EBITDA is forecasted to decline from 26.67x in 2023 to 12.26x in 2026 [8]