AMD forecasts quarterly revenue above expectations, betting on resilient demand for AI chips
AMD is seen as a leading challenger to Nvidia’s dominance by many analysts and investors. AMD-T forecast second-quarter revenue above Wall Street expectations on Tuesday, betting on resilient demand for its datacentre chips as cloud providers accelerate spending on artificial-intelligence infrastructure. Shares of the company jumped 5.5 per cent in extended trading after surging about 60 per cent so far this year. The company expects quarterly revenue of US$11.2-billion, plus or minus US$300-million, compared with estimates of US$10.52-billion, according to data compiled by LSEG. AMD, long seen by analysts and investors as a leading challenger to Nvidia’s dominance, is tapping in to a new AI hardware opportunity in the form of central processing units as companies move from training models to deploying them, a process known as inference. The company expects adjusted gross margins of about 56 per cent for the second quarter, compared with analyst expectations of 55.4 per cent. For the first quarter, adjusted for stock compensation and other items, AMD reported per-share earnings of US$1.37 on revenue of US$10.25-billion. Analysts expected revenue of US$9.89-billion and earnings of US$1.29 per share. Earlier this year, AMD said it had agreed to sell up to US$60-billion worth of artificial-intelligence chips to Meta Platforms over five years in a deal that allows the Facebook owner to purchase as much as 10 per cent of the chip firm. While analysts perceive AMD as best-positioned to benefit from the surging CPU demand due to market share gains and product road map, competition from Intel, which gave a strong revenue forecast last month, is heating up. After struggling with its chip production for several quarters, Intel is now ramping up its in-house fabrication efforts to cater to growing CPU demand, posing a threat to AMD, which is beholden to extremely tight capacity at TSMC. The semiconductor industry is also grappling with a global shortage of memory chips, stemming from a rush to secure supply of high-bandwidth memory used in data centres alongside GPUs and CPUs. The sharp increase in memory prices is also expected to hit demand for consumer electronics – a key market for AMD – as pricier computers are expected to turn consumers away. The stock has far outperformed Nvidia’s year-to-date gain of 6 per cent and the broader Philadelphia Semiconductor Index’s 48 per cent rise, as of Monday’s close.
Source: The Globe and Mail