AMD forecasts quarterly revenue above expectations, betting on resilient demand for AI chips
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AMD is seen as a leading challenger to Nvidia’s dominance by many analysts and investors.Dado Ruvic/Reuters
Advanced Micro Devices 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.
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 into a new AI hardware opportunity in the form of central processing unit (CPU) as companies move from training models to deploying them, a process known as inference.
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.
Shares of the company rose around 1 per cent in volatile extended trading on Tuesday after surging about 60 per cent so far this year.
AMD clinches second mega chip supply deal, this time with Meta
The stock has far outperformed Nvidia’s 6 per cent gain, and the broader Philadelphia semiconductor index’s 48 per cent rise, as of Monday close.
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.
