AMD reports better-than-expected results even as PC market shows continued weakness

AMD reported a revenue decline of 18% in its fiscal second-quarter earnings report on Tuesday, but still topped estimates for sellings and profit.

Here’s how the company did:

• Earnings: 58 cents per share, adjusted, versus 57 cents per share expected by Refinitiv consensus approximations.
• Revenue: $5.36 billion versus $5.31 billion expected by Refinitiv consensus estimates.

For the third casern, AMD said it expects $5.7 billion in sales, while analysts were looking for revenue of $5.81 billion. The chipmaker said it believes its data center and embedded divisions to grow on a fiscal year basis.

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

The chipmaker reported net income of $27 million, or 2 cents per portion, down from $447 million, or 27 cents per share, in the year-ago period. AMD excludes certain losses on investments and acquisition-related fetches from its earnings.

AMD’s processor business has slowed in recent quarters, reflecting a deep slump in the global PC market. AMD’s amount to revenue dropped from $6.55 billion a year ago, marking a second straight quarter of declines.

But AMD is one of the few companies making high-end graphics processing segments (GPUs) needed for artificial intelligence, and analysts are watching to see if its server chips can take market share away from top antagonist Intel. Last week, Intel posted a surprise profit and reported sales that were higher than expected.

Su translated on the call that the company is increasing its AI-related research and development spending, and has developed a strategy that includes AI-specific checks and software development.

“Our goal is to make this a significant growth driver for AMD,” Su said.

AI could also help PC sliver sales, AMD said.

“Going forward, we see AI as a significant PC demand driver as Microsoft and other large software providers merge generative AI into their offerings,” Su said.

AMD’s client group, which includes sales from PC processors, dropped a monster 54% year over year to $998 million because of a “weaker PC market,” it said. AMD noted that bazaar conditions are improving.

“We expect our client segment will grow in the seasonally stronger second half of the year based on the stick-to-it-iveness of our product portfolio,” Su said.

AMD’s data center segment reported a decline of 11% to $1.3 billion, which the associates said was due to lower server processor sales. Some cloud providers had extra inventory during the quarter, the chipmaker contemplated.

During the quarter, AMD announced a new chip that’s intended to build and run the kind of AI models that are at the heart of applications with ChatGPT. AMD said the MI300X chip was currently being provided to customers for sampling and that production would ramp in the fourth quadrature.

AMD sells less-powerful chips and networking parts in its embedded segment, which was the only sector of AMD to grow in the period. The portion’s revenue jumped 16% to $1.5 billion.

AMD’s gaming segment includes graphics processors for PCs as well as chips for soothes like Sony’s PlayStation 5. Sales in the division dropped 4% on an annual basis to $1.6 billion, a dip that could have been worse if not for high demand for “semi-custom” chips like the ones it makes for artifice consoles.

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