AMD Stock Gains after Q2 2023 Earnings and Plans to Boost AI Chip Production

AMD is gearing up for its AI progress and is pushing to launch its top-notch MI300 AI chips in the last quarter of the year.

On Tuesday, August 1, Advanced Micro Devices Inc (NASDAQ: AMD) posted moderately better-than-expected results for the second quarter earnings. AMD reported non-GAAP earnings of 57 cents per share for the quarter, showing a 45.7% decrease compared to the same period last year. Despite the decline, it exceeded Street forecasts by one cent.

The company’s group revenues also dropped by 18.2% to $5.359 billion, slightly surpassing analysts’ predictions of $5.31 billion. Also, revenue in the gaming sector declined by 4% compared to last year, amounting to $1.6 billion. Data center revenue also saw a decrease of 11% to $1.3 billion. The client segment, which includes personal computing, experienced a significant decline of 54% in revenue, reaching $998 million. On the other hand, the embedded segment witnessed a 16% increase in revenue, totaling $1.5 billion.

Looking ahead to the current financial year, AMD projects first-quarter revenue to be around $5.7 billion, with a margin of error of $300 million. The company expects gross margins to be approximately 51%. Refinitv forecasts had previously estimated third-quarter revenue to be $5.82 billion.

The AMd Stock price gain 2.8% on Tuesday ending the trading at the $117.60 price level. With 82% gains since the beginning of 2023, AMD is the second-best-performing member of the Philadelphia Stock Exchange Semiconductor Index.

AMD Is Betting on the AI Wave

Advance Micro Devices is now gearing up for the launch of its artificial intelligence (AI) chips ahead this year. AMD CEO Lisa Su announced that the company is getting ready to produce more of its top-notch MI300 AI chips in the last quarter of the year.

These chips, which are in high demand, are designed to compete with Nvidia’s advanced H100 chips. Many customers are showing strong interest in the MI300 series, and AMD has strengthened its partnerships with major cloud providers, big companies, and leading AI firms.

AMD assured that it has enough components for the MI300 chips to launch aggressively in the fourth quarter and meet demand until 2024. While the older MI250 chip is still popular for less complex AI tasks, the new MI300 chip will likely be a major player in the market.

Investors believe that the release of the MI300 chips will challenge Nvidia in the fast-growing market for AI chips. However, there’s a challenge as the MI300 chips currently exceed the performance limits allowed for sale in China due to export controls. Unlike Nvidia and Intel, AMD hasn’t made special chips for the Chinese market.

To address this, AMD is considering modifying the MI300 and older MI250 chips to comply with U.S. export controls while also meeting the demand for AI solutions in China. Lisa Su said:

“We delivered strong results in the second quarter as 4th Gen EPYC and Ryzen 7000 processors ramped significantly. 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.”

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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