After a challenging start to the year, the stock of Advanced Micro Devices (NASDAQ: AMD) made a remarkable recovery. AMD posted revenue of \(5.8 billion, accompanied by adjusted earnings of \)0.70 per share, primarily fueled by a substantial 42% year-over-year surge in CPU sales. In a strategic move to enhance its market share, the company is set to promptly dispatch MI300X chips to esteemed sky customers in anticipation of AI accelerators.
Market analysts are optimistic about a projected 11% surge in AMD stock from its current levels, indicating further growth potential. The third-quarter financial results for AMD exceeded expectations with earnings per share of 70 cents and a 4% year-over-year revenue increase to \(5.8 billion. Of particular note was AMD’s impressive forecast for 2024, predicting sales of \)2 billion for AI microchips.
Positive Outlook for Q4 Estimates of AMD Stock
Although AMD stock experienced a slight dip following its exceptional performance surpassing Q3 earnings projections but falling short on Q4 estimates, the outlook remains positive. Progress on the production front for the company’s AI chips, MI300A and MI300X, this quarter instills optimism for a promising future in the AI device industry come 2024.
AMD CEO Lisa Su anticipates revenue for data center GPUs to hit \(400 million in Q4 and exceed \)2 billion in 2024. Noteworthy financial highlights include a 4% revenue increase to \(5.6 billion and a Q3 net income rise to \)299 million. With strategic AI acquisitions and application enhancements, AMD underscores its dedication to the market and envisions substantial growth in its data center operations.
During the earnings call, Su underscored the escalating adoption of conceptual AI workloads. The Client group, responsible for PC processors, witnessed a significant 42% year-over-year revenue surge, reaching $1.5 billion.
Despite a downturn in the embedded segment’s profitability by 5% to \(1.2 billion due to challenges in the communications sector, the gaming segment experienced an 8% decline in sales to \)1.5 billion, attributed to reduced sales of “semi-custom” chips for consoles like the PlayStation 5.
AMD Unveils Instinct MI300 Event
On December 6, 2023, AMD introduced the cutting-edge AMD Instinct MI300 data center GPU at the “Advancing AI” conference. Dr. Lisa Su, AMD’s CEO, engaged with industry executives, AI ecosystem partners, and customers, discussing the company’s impact on the AI landscape and dynamic computing.
For the El Capitan supercomputer, AMD initiated the deployment of Instinct MI300A accelerators, boasting performance exceeding 2 ExaFLOPS, to the Lawrence Livermore National Laboratory. The MI300A, featuring three eight-core Zen 4 and multiple CDNA3 chiplets, is tailored for AI and high-performance computing workloads.
AMD Stock: A Compelling Opportunity
With the recent rollout of Instinct MI300 GPU accelerators for high-performance computing in the previous quarter, coupled with over 50% consecutive revenue growth for AMD’s Genoa-based EPYC server CPUs, the data center division anticipates revenue exceeding \(2 billion next year, a substantial uptick from this quarter’s sales of approximately \)1.6 billion, supported by anticipated production escalations.
Furthermore, the forthcoming launch of Turin, AMD’s next-gen EPYC server CPU in 2024, is poised to further bolster data center momentum. The unveiling of over 50 devices featuring AMD’s new Ryzen 7000 cards last quarter, in collaboration with Microsoft, underscores efforts to introduce new features in the upcoming Windows release, potentially challenging Nvidia’s dominance in data center AI acceleration.
Disclaimer: As of the publication date, Chris MacDonald did not hold any direct or indirect positions in the stocks mentioned in this article. The opinions expressed by the author are in accordance with the InvestorPlace.com Publishing Guidelines.
With a background encompassing management roles in commercial banking and venture capital over the past 15 years, Chris MacDonald’s passion for investment led him to pursue an MBA in Finance. His expertise in financial analysis and knack for identifying undervalued growth opportunities have shaped his traditional, long-term investment approach.
