AMD(US:AMD)2024-10-29 23:56Financial Data and Key Metrics - Q3 2024 revenue increased 18% YoY to a record $6.8 billion, driven by strong Data Center and Client Processor sales [7][8] - Gross margin expanded by 2.5 percentage points YoY, and EPS grew 31% YoY [8] - Data Center segment revenue more than doubled to $3.5 billion, accounting for 52% of total revenue [9][50] - Client segment revenue grew 29% YoY to $1.9 billion, driven by strong demand for Zen 5 processors [33][52] - Gaming segment revenue declined 69% YoY to $462 million due to reduced semi-custom sales [37][53] - Embedded segment revenue decreased 25% YoY to $927 million, with gradual recovery in some end markets [39][54] Business Line Performance - Data Center GPU revenue ramped significantly, with MI300X adoption expanding among cloud, OEM, and AI customers [20] - EPYC CPU sales grew strongly, with over 200 different EPYC solutions available for enterprise and edge workloads [13] - Ryzen AI 300 Series sales ramped significantly in the mobile segment, with new notebooks from Acer, HP, Lenovo, and Asus [34] - Gaming Graphics revenue declined as the company prepared for the transition to next-gen Radeon GPUs based on RDNA 4 architecture [38] Market Performance - Public cloud instances increased 20% YoY to over 950, with Microsoft, AWS, and others expanding EPYC processor-powered offerings [12] - Enterprise sales grew by a strong double-digit percentage YoY for the fifth straight quarter, with wins from Airbus, Daimler Truck, FedEx, and others [14] - Embedded demand showed gradual recovery, led by strength in test and emulation, but industrial markets remained soft [39][78] Strategic Direction and Industry Competition - The company launched the next-generation Turin family, which delivers performance and TCO leadership across enterprise and cloud workloads [15] - AMD formed an ecosystem advisory group with Intel and industry leaders to accelerate innovation in the x86 architecture [19] - The company announced a definitive agreement to acquire ZT Systems to enhance AI infrastructure capabilities [27] - AMD expects the AI accelerator TAM to grow at over 60% annually to $500 billion by 2028 [44] Management Commentary on Operating Environment and Future Outlook - Management highlighted strong demand for Instinct, EPYC, and Ryzen processors, expecting continued growth in Q4 [41] - The company is well-positioned to capitalize on the rapid adoption of AI, which is driving demand for high-performance computing [43] - AMD expects Q4 2024 revenue to be approximately $7.5 billion, up 22% YoY, driven by growth in Data Center and Client segments [57] Other Important Information - Inventory increased sequentially by $383 million to $5.4 billion to support the ramp of Data Center segment products [55] - The company returned $250 million to shareholders through share repurchases in Q3 2024 [56] - AMD plans to divest ZT Systems' U.S.-based data center infrastructure manufacturing business after the acquisition closes [29] Q&A Session Summary Question: Data Center GPU Business Growth and Customer Expansion [62] - AMD raised its 2024 Data Center GPU revenue outlook to exceed $5 billion, driven by strong customer milestones and product ramp [63] - The company expects broadening customer engagements and workload optimization to drive growth in 2025 [65] Question: Gross Margin Outlook for Q4 and Beyond [66] - Q4 gross margin is expected to be approximately 54%, with Data Center growth and Embedded recovery providing tailwinds [68][69] - Client business expansion may pose a headwind due to its consumer focus, but operational efficiency improvements are expected to support margins [70][71] Question: Supply Chain and Production Capacity for MI300 and MI325 GPUs [72] - The supply chain has ramped well, with capacity planned for significant growth in 2025 [73][74] - Data Center is the largest contributor to sequential revenue growth in Q4, followed by the Client segment [75][76] Question: Embedded Business Recovery and Outlook [78] - Embedded business showed modest improvement in Q3, with strength in test and emulation and aerospace, but industrial and communications markets remain soft [79][80] Question: EPYC CPU Business and AI Workloads [81] - EPYC CPU business saw strong growth, with Zen 4 and Zen 5 portfolios driving demand in both enterprise and cloud markets [82][83] - Turin CPUs are well-optimized for traditional server workloads and AI content, supporting growth in 2025 [87][88] Question: PC Market Trends and Seasonality [90] - AMD expects seasonality in the PC market, with a stronger second half driven by product launches and AI PC adoption [91][92] - The company sees opportunities for growth in both consumer and enterprise segments in 2025 [120] Question: Data Center GPU Revenue and Growth Trajectory [95] - AMD is confident in its ability to grow Data Center GPU revenue, with MI325X and MI350 series products expected to drive workload expansion [96][97] - The company is working closely with customers to optimize software and hardware performance [100] Question: Competitive Positioning and Market Share [113] - AMD believes its product portfolio is competitive, with MI325X and MI350 series closing the gap with industry leaders [114][115] - The company sees significant opportunities to expand its customer base and workload breadth [116] Question: Client Segment Performance and ASP Trends [117] - AMD's client business saw strong sell-through in Q3, with growth driven by both units and ASPs [118][119] - The company expects continued momentum in AI PCs and enterprise adoption in 2025 [120] Question: EPYC Business Growth and China Market [122] - EPYC business saw positive growth momentum in Q3, with strength in both enterprise and cloud markets [123][124] - AMD is underrepresented in the China market, presenting an opportunity for future growth [126] Question: Data Center GPU Revenue Size and Growth [128] - Data Center GPU revenue exceeded $1.5 billion in Q3, with expectations for continued growth in Q4 [129] - The business may experience lumpiness due to large customer deployments [130] Question: Gross Margin for Instinct GPUs [138] - Instinct GPU gross margins are below corporate average but expected to improve as revenue scales and operational efficiency increases [139][141] Question: MI325X Launch and Embedded Market Trends [144] - MI325X production shipments are planned for Q4, with a ramp expected in Q1 2025 [146] - Embedded business recovery is gradual, with strength in test and emulation, aerospace, and automotive, but industrial and communications markets remain soft [147][148]