Advanced Micro Devices (AMD, Financial) is trading flat after announcing strong Q1 results. The company reported a 35.9% year-over-year revenue increase to $7.44 billion, exceeding expectations. This growth was driven by strong sales of Instinct AI accelerators, EPYC, and Ryzen CPUs. The mid-point of Q2 revenue guidance also surpassed analyst expectations.
- In the previous quarter, AMD's stock fell despite positive earnings due to a Data Center segment revenue miss. However, in Q1, Data Center segment revenue surged 57% year-over-year to $3.7 billion, fueled by CPU server share gains and robust demand for AMD Instinct GPUs among cloud and enterprise customers.
- Data Center AI business revenue also saw a significant double-digit year-over-year increase, with MI325X shipments ramping up to support new enterprise and cloud deployments. Several hyperscalers expanded their use of Instinct accelerators for generative AI search, and AMD added multiple Tier 1 cloud and enterprise customers.
- AMD has started sampling its next-gen MI350 series with customers, aiming for accelerated production by mid-2025. The upcoming Instinct MI400 series, set for a 2026 release, is designed to enhance AI training and inference tasks, with early customer feedback being very positive.
- In April, a new export license requirement for MI308 shipments to China was implemented, leading to an estimated $700 million revenue reduction in Q2 and $1.5 billion for FY25.
- Client and Gaming segment revenue grew 28% year-over-year to $2.9 billion. Notably, Client revenue surged 68% year-over-year to $2.3 billion due to strong demand for "Zen 5" AMD Ryzen processors. Gaming revenue declined 30% year-over-year to $647 million, while Embedded segment revenue fell 3% year-over-year to $823 million.
Overall, AMD's Q1 report was solid, with Q2 guidance providing reassurance. The Data Center segment performed well, and timelines for the MI350 and MI400 series were reaffirmed. Although the new export license requirement poses challenges, there is some clarity on its impact. However, concerns remain until the China-related issues are resolved.
