Chip giant AMD (AMD) is expected to report its second-quarter earnings after the bell on Tuesday, as Wall Street looks to see if AI infrastructure spending continues its upward trajectory. In the previous quarter, AMD said data center revenue increased 80% year over year to $2.3 billion, thanks to sales of its Instinct graphics processing units (GPUs) and EPYC central processing units (CPUs). .
For the second quarter, Wall Street forecasts adjusted earnings per share (EPS) of $0.68 on revenue of $5.7 billion, according to Bloomberg consensus estimates. That would be a solid improvement over the same quarter last year, when AMD reported adjusted EPS of $0.58 on revenue of $5.4 billion.
Analysts and investors will once again be closely watching AMD’s data center segment, as well as any potential forecasts related to sales of the company’s GPUs. According to data from Bloomberg, AMD is expected to report data center revenue of US$2.75 billion, up from US$1.3 billion in the same quarter last year.
AMD shares are down about 5% year to date. Intel (INTC) shares, in turn, fell more than 38%. On the other hand, Nvidia (NVDA) shares rose 125%.
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. Its Customer segment, which includes PC chip sales, is still an important part of its business. For the quarter, analysts expect AMD to report customer revenue of $1.45 billion, up from $998 million in the same period last year.
The anticipated improvement in Client segment revenues 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 8 consecutive quarters of declines.
Gaming revenue, however, is expected to take a big hit in the second quarter. Analysts expect revenue to decline from the $1.6 billion the segment generated last year to just $646 billion in the second quarter.
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 to make it to the end of 2024 and 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.
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