AMD stock: AMD Reports Solid Earnings and ‘Strong Progress’ on AI Chips

Our AI engagements increased by more than seven times in the quarter as multiple customers initiated or expanded programs supporting future deployments of Instinct accelerators [data center chips often used for AI applications] at scale,” CEO Lisa Su said in the release. “We made strong progress meeting key hardware and software milestones to address the growing customer pull for our data center AI solutions.

Looking to the third quarter, we expect our data center and client segment revenues to each grow by a double-digit percentage sequentially driven by increasing demand for our Epyc and Ryzen processors, partially offset by gaming and embedded segment declines,” Chief Financial Officer Jean Hu said in the release.

We delivered strong results in the second quarter as 4th Gen EPYC and Ryzen 7000 processors ramped significantly,” said AMD Chair and CEO Dr. Lisa Su. “Our AI engagements increased by more than seven times in the quarter as multiple customers initiated or expanded programs supporting future deployments of Instinct accelerators at scale. We made strong progress meeting key hardware and software milestones to address the growing customer pull for our data center AI solutions and are on-track to launch and ramp production of MI300 accelerators in the fourth quarter.

We are expecting a large ramp in the second half for our Data Center business, weighted towards the fourth quarter and we are still looking at a zip code — let’s call it 50%, plus or minus, second half to first half,” AMD CEO Lisa Su said on a call with analysts.

AMD’s flagship chips exceed the performance limits for sale to China under U.S. export control rules issued last year, and unlike Nvidia and Intel (INTC.O), the company has not yet created special chips for the Chinese market. On a conference call with investors, Su said that AMD sees sales potential in China’s AI market.

While AMD has consistently grown its market share of the global CPU processors, driven by product innovations such as its Ryzen processors built on the Zen microarchitecture, margin erosion and the cyclicality in the chip business have been two of the company’s biggest headwinds over the past several quarters. The company will report second quarter fiscal 2023 earnings results after the closing bell Tuesday.