2024-01-31
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2 minutes.


AMD: AI chip revenue forecast raised to $1.5 billion, but investors expected more

AMD increased its forecast for artificial intelligence (AI) processor revenue by $1.5 billion in 2024. But investors needed more: A doubling of AI processor sales forecast to $3.5 billion was not enough to meet Wall Street expectations and mitigate the impact of a significant decline in AMD's traditional chip and video game businesses.

AMD's AI Processor Revenue Outlook

Investor Disappointment

AMD posted disappointing results in the current quarter with lower operating profits and profitability. Rates were too high and investors were disappointed with the current quarter's guidance, said Investing.com analyst Jesse Cohn.

Low forecast for the current quarter

AMD forecasts revenue for the current quarter to be about $5.4 billion, below Wall Street estimates of 5. 73 billion dollars. The company did not issue earnings per share guidance.

Stock Performance

Shares of Advanced Micro Devices are up about 140% over the past year, outperforming the benchmark PHLX Semiconductor Index by nearly 90 percentage points. However, the company's shares fell about 6% after the results were announced.

Future Forecasts

AMD CEO Lisa Su said the company could sell more than $3.5 billion in AI chips as soon as the second half of the year Additional capacity will be put into operation. However, analysts had previously valued the AI segment at between $4 billion and $8 billion, and that estimate is weighing on the stock's valuation, said Summit Insights analyst Kingai Chan.

Data Center Market

AMD's data center segment, which includes traditional server chips and AI processors, grew 38% to $2.3 billion comparing with the previous year. However, demand from cloud computing companies has been weak, Su said on a conference call.

AMD as an alternative to Nvidia

Companies are looking for an alternative to the advanced AI chips made by Nvidia, which have about 80% of the market. As companies look to develop and run their own generative AI applications, enterprise budgets are being directed toward the processors involved. AMD has one of the few viable alternative products on the market.

AMD AI chip revenue forecast raised to 1 5 billion but investors expected more

AMD raised its forecast for artificial intelligence (AI) processor revenue by $1.5 billion in 2024. Investors expected more: AI processor sales forecast was doubled to $3.5 billion, but that wasn't enough to meet Wall Street expectations and mitigate the impact of a significant decline in AMD's traditional chip and video game businesses.

AMD's AI Revenue Projections

Investor Disappointment

AMD posted disappointing results in the current quarter, with operating profit declining and profitability. Forecasts for the current quarter fell short of meeting investor expectations, Investing.com analyst Jesse Cohn said.

Low guidance for the current quarter

For the current quarter, AMD forecast revenue of about $5.4 billion, below Wall Street's forecast of $5.73 billion . The company did not issue earnings per share guidance.

Stock Performance

Shares of Advanced Micro Devices are up about 140% over the past year, outperforming the benchmark PHLX Semiconductor Index by nearly 90 percentage points. However, after the results were announced, the company's shares fell by about 6%.

Future Predictions

AMD CEO Lisa Su said the company could sell more than $3.5 billion in AI chips once they go into production additional capacity in the second half of the year. However, analysts have previously given forecasts for the AI segment in the range of $4 billion to $8 billion, and AMD's stock valuation is tied to those forecasts, said Summit Insights analyst Kingai Chan.

Data Center Market

AMD's data center segment, which includes traditional server chips and AI processors, grew 38% to $2.3 billion compared to the previous year. However, demand from cloud computing companies remained weak, Lisa Su said during a conference call.

AMD as an alternative to Nvidia

For their generative AI applications, companies are increasingly turning to the design and use of appropriate processors. Businesses large and small are looking for alternatives to the cutting-edge, high-end AI chips made by Nvidia, which has about 80% of the market. AMD offers one of the few viable alternative products on the market.

Questions Answered

What is AMD's forecast for AI processor revenue in 2024?

AMD raised its 2024 revenue forecast for its artificial intelligence (AI) processors by $1.5 billion.

Why weren't Wall Street's lofty forecasts met?

A nearly doubling of AI processor sales forecast to $3.5 billion was not enough to meet Wall Street's lofty forecasts driven by a significant decline in AMD's business in the field of traditional chips and video games.

How did AMD perform in the current quarter?

AMD delivered disappointing results this quarter, with notable declines in operating profit and operating margin.

Additional information

  • AMD is an artificial intelligence processor and chip company
  • Wall Street - financial district of Manhattan in New York City
  • Reuters - international news agency
  • PHLX Semiconductor Index - index, reflecting the state of the semiconductor market
  • Lisa Su - CEO of AMD
  • Hvidia - a company that produces artificial intelligence chips

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Copywriter Elbuz
Brief description
AMD raised its 2024 revenue forecast for its artificial intelligence (AI) processors by $1.5 billion. However, this did not seem enough to investors; their expectations were higher.
Article Target
Inform about increased revenue forecast for AMD AI chips and investor reaction
Style
Information article
Target audience
Investors, technology specialists, knowledgeable public


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AMD raised its 2024 revenue forecast for its artificial intelligence (AI) processors by $1.5 billion. However, this did not seem enough to investors; their expectations were higher.


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