AMD: Share slumps despite high AI sales
The MI300 accelerators and processors are making AMD a lot of money. But that's not enough for the stock market.
Board with four AMD Instinct MI325X, one MI300X variant with more memory.
(Image: AMD)
The money from the AI boom is slowly but surely reaching AMD. Year-on-year, revenue is up 18%, operating profit is up 223% and net profit is up 158%: AMD generated revenue of over 6.8 billion US dollars in the third quarter of 2024 and operating profit amounted to 724 million dollars. Net profit was slightly higher at 771 million due to a tax credit.
The Data Center division is growing the fastest by far. Within one year, turnover rose from 1.6 billion to almost 3.6 billion dollars. With an operating profit of more than one billion dollars, it is AMD's most lucrative division by far. According to the manufacturer, the AI accelerators of the Instinct MI300 series in particular are bringing in more money. But the Epyc server processors are also expected to do well.
At the analyst conference, AMD's CFO Jean Hu revealed that the gross margin of the MI300 accelerators is still below the company average of 50 percent. This may be due to the ramp-up in production, but AMD may also be trying to gain market share through lower prices. Thanks to its lucrative AI accelerators, market leader Nvidia achieves 75 percent and more.
(Image:Â AMD)
Ryzen top, Radeon flop
The client division around all Ryzen processors is also doing well. It grew from a turnover of just under 1.5 billion dollars to just under 1.9 billion within one year. The operating profit almost doubled to 276 million dollars. Even if little of this can be seen in German retail, according to AMD, the Zen 5 CPUs in particular should sell in large numbers. This is more likely to affect the Ryzen AI 300 for notebooks than the Ryzen 9000 for desktop PCs.
Meanwhile, the gaming division with Radeon graphics cards and console chips is almost imploding. Turnover continues to plummet to 462 million dollars. The group is now only just profitable. A year ago, turnover was more than three times as high; operating profit 17 times as high.
According to AMD, console sales with Sony's Playstation 5 and Microsoft's Xbox Series X/S in particular continue to decline. The figures once again illustrate how little money Radeon graphics cards still bring in.
Xilinx takes, Xilinx gives
The embedded division continues to do well, mainly with products from the acquired company Xilinx, including programmable logic gate chips (FPGAs). It achieved a turnover of 927 million dollars and an operating profit of 372 million. According to AMD, the annual decline of 25 percent is due to an industry-wide inventory correction. In a quarterly comparison, the division grew again.
The figures do not include the ongoing costs for the Xilinx takeover. Under "everything else", AMD continues to report a loss of around one billion dollars per quarter – mainly for the Xilinx payment.
Meanwhile, AMD is using the AI money to increase its research and development spending. While it was still at 1.51 billion dollars in the third quarter of 2023, it is now 1.64 billion dollars.
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Share price falls
In the current fourth quarter of 2024, AMD expects sales of 7.5 billion dollars, +/- 300 million. The mean value would correspond to annual growth of 22 percent. The stock market is dissatisfied with this: AMD's share fell by around 9 percent after the announcement of the business figures.
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