AMD Forecasts $3.5 Billion AI Chip Revenue in 2024

On January 30th, AMD disclosed its financial results for the fourth quarter of 2023 and the full year of 2023. While the overall performance aligned with expectations, the stock experienced a notable after-hours decline of 6.49% owing to a less optimistic performance outlook for the first quarter of 2023.

In Q4 2023, AMD reported revenue of $6.2 billion, surpassing the previous year's $5.6 billion. The gross profit margin was 47%, with operating income at $342 million, net profit at $667 million, and diluted earnings per share at $0.41. Under the Non-GAAP calculation, the gross profit margin was 51%, operating income was $1.4 billion, net profit was $1.2 billion, and diluted earnings per share were $0.77, marking an increase from the previous year's $0.69.

As per FactSet analysts, the average predicted revenue for Q4 2023 was $6.1 billion, with a Non-GAAP diluted earnings per share of $0.77, aligning with AMD's actual performance.

For the full year of 2023, AMD reported revenue of $22.7 billion, with a gross profit margin of 46%, operating income of $4.01 billion, net profit of $854 million, and diluted earnings per share of $0.53. Under Non-GAAP, the gross profit margin was 50%, operating income was $4.9 billion, net profit was $4.3 billion, and diluted earnings per share were $2.65.

Breaking down the business segments, the data center department showed robust growth in Q4 2023 with revenue of $2.3 billion, a YoY increase of 38% and a QoQ increase of 43%, propelled by strong sales of AMD Instinct™ GPU and the fourth-generation AMD EPYC™ CPU. For the full year, data center revenue reached $6.5 billion, a 7% increase from the previous year.

The client segment experienced a Q4 revenue of $1.5 billion, a YoY growth of 62%, mainly attributed to increased sales of AMD Ryzen 7000 series CPUs. However, for the full year, due to a decline in the PC market, client segment revenue dropped by 25% to $4.7 billion.

In the gaming sector, Q4 revenue was $1.4 billion, exceeding market expectations of $1.2 billion. Nevertheless, it saw a YoY decrease of 17% and a QoQ decrease of 9%, primarily due to a decline in semi-custom revenues, partially offset by the growth in AMD Radeon™ GPU sales. The full-year gaming department revenue was $6.2 billion, a 9% decrease, mainly due to declining semi-custom sales.

The embedded segment reported Q4 revenue of $1.1 billion, a YoY decrease of 24% and a QoQ decrease of 15%, primarily due to reduced customer inventory levels. However, for the full year, embedded segment revenue was $5.3 billion, a 17% increase, driven by the full-year income related to the acquisition of Xilinx completed in February 2022.

Dr. Lisa Su, CEO and Chairperson of AMD, stated, "We delivered a strong performance in 2023, with record quarters driven by strong sales of AMD Instinct GPU, EPYC CPU, and higher AMD Ryzen processor sales. The demand for our high-performance data center product portfolio continues to accelerate, enabling robust annual growth in almost every segment of the AI computing market."

Jean Hu, AMD's Executive Vice President, CFO, and Chief Accounting Officer, mentioned, "Despite the complex demand environment, AMD's performance in 2023 remained strong. We drove YoY growth in the data center and embedded segments and successfully launched the AMD Instinct MI300 GPU, laying the foundation for strong product growth in 2024."

Looking ahead to Q1 2024, AMD forecasts a median revenue of $5.4 billion (plus or minus $300 million), slightly below the analyst estimate of $5.7 billion from FactSet. AMD anticipates flat QoQ revenue, with a decline in server revenue offset by the growth in GPU demand for data centers. Client, embedded, and gaming segment revenues are expected to be lower than the previous quarter, with a significant double-digit percentage QoQ decline projected for the semi-custom business, primarily supplying processors for Microsoft Xbox and Sony Playstation gaming consoles.

Possibly influenced by the lower-than-expected Q1 performance guidance, AMD's stock experienced a 3.24% decline on January 30th, followed by an additional 6.49% drop in after-hours trading.

Notably, during the January 30th earnings conference call, Dr. Lisa Su, AMD's CEO, predicted that AMD's AI chip revenue in 2024 would reach $3.5 billion, surpassing the previous estimate of $2 billion.