AMD Earnings: Shares Tumble As Semiconductor Giant Narrowly Beat Expectations On Record Data Center Revenue

Topline

Advanced Micro Devices beat Wall Street expectations on earnings and revenue by a small margin, sending shares of the semiconductor firm tumbling in after-hours trading.

Key Facts

AMD reported $0.92 earnings per share and $6.8 in revenue in the third quarter of 2024, meeting analyst consensus estimates of $0.92 and $6.7 billion, respectively, according to FactSet.

Shares of AMD rose briefly prior to the earnings release, before falling by more than 6% in after-hours trading.

The company’s revenue increased 17% from $5.8 billion last year—the figures are driven largely by record Data Center revenue, which includes sales of server microprocessors and graphic processing units.

AMD’s share price has more than doubled since the start of 2023 to about $155 largely due to an increase in demand for AI chips and processors, positioning it as a competitor to Nvidia, though “recent next-gen announcements do not appear to substantially close the gap to what Nvidia is delivering,” Bernstein analysts wrote ahead of earnings.

Key Background

The earnings release follows the company’s Advancing AI event earlier this month, when AMD released its new generation of AI chips but did not announce new large customers. Among AMD’s largest customers are Microsoft, Google and Meta, which started using its AI chips for their cloud computing businesses and AI models in 2023 as part of a search for cheaper alternatives to Nvidia’s chips. The AI chip market could reportedly reach $400 billion in annual sales over the next five years, with Nvidia currently holding a market share of about 70% to 95%.

Forbes Valuation

AMD chair and CEO Lisa Su has an estimated net worth of $1.1 billion, according to Forbes’ real-time tracker. More than half of her fortune is tied up in AMD shares, which has soared almost 40-fold since Su became CEO in 2014, thanks to a boom in generative AI. A rally on Tuesday sent her net worth up by $29 million before market close. Su ranked No. 27 in this year’s list of America’s Self-Made Women.

Crucial Quote

"AI is clearly our number one priority as a company and we have really harnessed all of the development capability within the company to do that," Su said in June.

Further Reading

Why AMD Spent $665 Million Buying A Tiny AI Research Team (Forbes)