Chip giant AMD (AMD) released its second-quarter earnings after the bell Tuesday, beating analysts’ expectations on top and bottom lines and publishing better-than-expected guidance for the third quarter.
AMD, like rival Nvidia, is riding the AI train, which is driving sales of its data center graphics processing units (GPUs) and central processing units (CPUs). For the quarter, AMD reported adjusted earnings per share (EPS) of $0.69 on revenue of $5.8 billion. Wall Street was forecasting adjusted earnings per share of 68 cents on revenue of $5.7 billion, according to Bloomberg consensus estimates. AMD reported adjusted EPS of $0.58 on revenue of $5.4 billion during the 2023 period.
“Our AI business has continued to accelerate and we are well positioned to deliver strong revenue growth in the second half of the year, led by demand for Instinct, EPYC and Ryzen processors,” AMD CEO Lisa Su said in a statement.
“Rapid advances in generative AI are driving demand for more computing across markets, creating significant growth opportunities as we deliver leading AI solutions across our businesses.”
AMD’s data center revenue, which includes sales of AMD GPUs and CPUs, reached $2.8 billion, beating expectations of $2.75 billion. This represents a 115% jump from the same quarter last year, when AMD reported data center revenue of $1.3 billion.
AMD shares rose as much as 5% following the report, while shares of rival Nvidia (NVDA) jumped 3%. Intel (INTC) shares were flat.
AMD’s current flagship GPU is the MI300X. During a press conference at the Computex event in Taiwan in June, AMD said partners and customers including Microsoft, Meta, Dell, HPE and Lenovo are already adopting the chip. The company also revealed that its next-generation MI325X will be available from the fourth quarter, while the MI350X will hit the market in 2025. AMD said it will launch the MI400 in 2026.
However, it’s not just AI that matters to AMD. The Customer segment, which includes PC chip sales, is still an important part of its business. For the quarter, the company reported revenue of US$1.5 billion, exceeding expectations of US$1.45 billion, and above the US$998 million in the same period last year.
The Client segment beat comes as the PC industry continues its recovery following a significant slowdown following the explosive growth seen at the start of the pandemic.
But that was four years ago, and consumers are starting to buy replacements for the PCs they bought at the start of the pandemic. This, according to IDC, resulted in a 3% increase in worldwide PC shipments year over year in the second quarter, marking the second quarter of growth after eight consecutive quarters of declines.
Gaming revenue reached $648 billion in the second quarter, down 59% year over year but beating estimates of $646 billion.
Just like the PC industry, the gaming industry has also been facing a slowdown compared to the days of sky-high sales at the start of the pandemic era. Still, there is hope for the gaming industry in late 2024 and early 2025, as Nintendo prepares to launch its next console and Take-Two prepares its highly anticipated “Grand Theft Auto VI” late next year.
AMD is the first of the big three chip companies to report earnings this quarter. Intel will do the same on August 1st, while Nvidia will release its earnings on August 28th.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
For the latest company earnings reports and analysis, earnings rumors and expectations, and earnings news, click here
Read the latest financial and business news from Yahoo Finance
