AMD stock jumps after earnings beat driven by AI chip sales

Chip large AMD (AMD) reported its second quarter earnings after the bell on Tuesday, beating analysts’ expectations on the highest and backside strains and posting better-than-anticipated steering for the third quarter.

AMD, like rival Nvidia, is using the AI hype prepare, which is powering gross sales of its knowledge middle graphics processing items (GPUs) and central processing items (CPUs). For the quarter, AMD reported adjusted earnings per share (EPS) of $0.69 and income of $5.8 billion. Wall Road was anticipating adjusted EPS of $0.68 on income of $5.7 billion, in line with consensus estimates by Bloomberg. AMD reported adjusted EPS of $0.58 on income of $5.4 billion in the course of the interval in 2023.

“Our AI enterprise continued accelerating and we’re nicely positioned to ship robust income development within the second half of the yr led by demand for Intuition, EPYC and Ryzen processors,” AMD CEO Lisa Su mentioned in an announcement.

“The fast advances in generative AI are driving demand for extra compute in each market, creating vital development alternatives as we ship management AI options throughout our enterprise.”

Shares of AMD jumped by over 9% in pre-market buying and selling on Wednesday, whereas shares of rival Nvidia (NVDA) rose 5%. Shares of Intel (INTC) had been up 2%.

AMD’s Information Middle income, which incorporates gross sales of AMD’s GPUs and CPUs, topped out at $2.8 billion, beating expectations of $2.75 billion. That is a 115% leap versus the identical quarter final yr, when AMD reported Information Middle income of $1.3 billion.

AMD’s present high GPU is its MI300X. Throughout a press convention on the Computex occasion in Taiwan in June, AMD mentioned companions and prospects, together with Microsoft, Meta, Dell, HPE, and Lenovo, are already adopting the chip. The corporate additionally revealed that its next-generation MI325X can be obtainable starting in This fall, whereas the MI350X will hit the market in 2025. AMD mentioned it can roll out the MI400 in 2026.

It isn’t simply AI that issues for AMD, although. Its Shopper section, which incorporates gross sales of chips for PCs, continues to be an essential a part of its enterprise. For the quarter, the corporate reported income of $1.5 billion beating expectations of $1.45 billion, and up from $998 million in the identical interval final yr.

The Shopper section beat comes because the PC business continues its turnaround following a major slowdown after the explosive development seen on the onset of the pandemic.

However that was 4 years in the past, and customers are starting to buy replacements for the PCs they purchased at the beginning of the pandemic. That, in line with IDC, has resulted in worldwide PC shipments rising 3% yr over yr within the second quarter, marking the second quarter of development after eight consecutive quarters of declines.

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Gaming income topped out at $648 million in Q2, down 59% year-over-year from $1.5 billion, however beating estimates of $646 million.

Just like the PC business, the gaming business has additionally been contending with a slowdown in comparison with the high-flying sale days of the early pandemic period. Nonetheless, there’s hope for the gaming business going into the tip of 2024 and begin of 2025 as Nintendo prepares to launch its subsequent console and Take-Two readies its extremely anticipated “Grand Theft Auto VI” later subsequent yr.

AMD is the primary of the large three chip firms to report its earnings this quarter. Intel will comply with go well with on Aug. 1, whereas Nvidia will report its earnings on Aug. 28.

Correction: A earlier model of this story misstated gaming earnings as billions relatively than tens of millions. It has been corrected.

Electronic mail Daniel Howley at [email protected]. Comply with him on Twitter at @DanielHowley.

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