SANTA CLARA: Chipmaker Advanced Micro Devices (AMD) forecast first-quarter revenue below Wall Street estimates on Tuesday (Jan 30), but projected strong sales for its artificial intelligence (AI) processors.
As companies look to develop and operate their own generative AI applications, enterprise budgets are being funneled into processors used in AI servers.
Large and small businesses are looking for alternatives to the advanced AI chips produced by Nvidia, which commands roughly 80% market share. AMD has one of the few viable alternative products in the market.
AMD’s fourth-quarter data centre segment revenue, which includes its AI server chips, grew 38% from a year ago to US$2.3 billion.
“Demand for our high-performance data centre product portfolio continues to accelerate, positioning us well to deliver strong annual growth in what is an incredibly exciting time as AI reshapes virtually every part of the computing market,” CEO Lisa Su said in a statement.
Shares of the Santa Clara, California-based company fell roughly 3.5% in extended trading.
AMD’s supply of AI chips for 2024 is “well above” US$2 billion worth, and the company had forecast fourth-quarter AI chip sales of US$400 million.
The company reported overall fourth-quarter revenue of US$6.17 billion, slightly above analysts’ estimates of US$6.12 billion.
AMD logged an adjusted gross margin of 51% for the quarter, compared to estimates of 51.4%.
AMD said it expects revenue of US$5.4 billion, plus or minus US$300 million, for the current quarter, compared with analysts’ average estimate of US$5.73 billion, according to LSEG data.
On an adjusted basis, AMD forecast first-quarter gross margin of about 52%, compared with the estimate of about 51.7%.
The market for programmable chips, which can be customised to perform a variety of functions, has faltered in past quarters as industries like automotive and industrial are being hit by a chip supply glut due to weak end-market demand.
AMD’s fourth-quarter embedded segment revenue fell roughly 24% to US$1.1 billion.
Rival Intel also flagged corrections in programmable chip inventories across industries on a post-earnings call, which it said are expected to last through the first half of the year. – Reuters
