AMD Boosts AI Chip Revenue Forecast and Expects Tight Supplies
AMD raises its 2024 AI chip revenue forecast by US$500 million. Tight supplies of AI chips expected until 2025. AMD's data centre revenue in Q2 jumps by 115% to US$2.8 billion.
The company anticipates that supplies will remain constrained until 2025. This announcement boosted AMD's stock by 7.5% in after-hours trading.
AMD's AI chips are mostly purchased by major cloud computing businesses. Industry experts and analysts consider AMD's AI processor range as a significant competitor to market leader Nvidia. Following AMD's announcement, Nvidia's shares rose 4.7%.
AMD has notable customers, like Meta Platforms, and earlier this year, Microsoft announced access to a set of AMD CPUs for AI applications via its cloud platform.
Due to increased demand, AMD's CEO Lisa Su announced that the firm has updated its 2024 AI chip sales prediction to US$4.5 billion, up from the previous target of US$4 billion. Su stated that the availability of these chips will be limited until 2025, as noted on a recent quarterly earnings call.
In the second quarter, AMD's data centre revenue, its largest division, increased 115% to US$2.8 billion, slightly exceeding the projected US$2.79 billion. Notably, quarterly revenue from AI chips, which are mostly centred in the data centre industry, reached $1 billion for the first time.
Ben Bajarin, CEO of Creative Strategies, compared the current situation to the California gold rush, saying, "We are in the picks and shovels cycle, which is more about hardware infrastructure right now." He emphasised that, while most businesses are investing in AI software, they are still in the trial and pilot stages, not completely deploying it.
Despite huge expenditures in AI technology, returns have been modest thus far. Microsoft's shares slumped 6% after growth in its cloud services fell short of estimates, implying that large IT companies may take longer to reap the advantages of AI spending.
AMD raises its 2024 AI chip revenue forecast by US$500 million.
Tight supplies of AI chips expected until 2025.
AMD's data centre revenue in Q2 jumps by 115% to US$2.8 billion.
Source: REUTERS