AMD Returns to Revenue Growth in Q3 2023 & Expects Strong AI Chip Sales Ahead, as it Tries to Catch Up with Nvidia

  • AMD.us
    (${instrument.percentChange}%)
  • NVDA.us
    (${instrument.percentChange}%)

AMD Q3 2023 Earnings

The chip designer reported improved financials for the third quarter on Wednesday, with CEO Lisa Su speaking of "strong top line and bottom line growth" during the earnings call [1]. Profits saw a noteworthy bump, from the poor readings of the past few quarters. Net income quadrupled from a year ago to $299 million (GAAP), while operating margins turned positive (4%).

Furthermore, sales of $5.8 billion marked a 4% y/y increase and a return to revenue growth, after two negative quarters. The firm expects an acceleration in the fourth quarter to 9% y/y and $6.1 billion (+/- $300 million). In that quarter, executives expect to start seeing the impact of their Artificial Intelligence chips.

OpenAI's ChatGPT chatbot sparked a generative AI arms race, with Silicon Valley giants racing for supremacy. This revolution would not be possible without NVIDIA, which already reaps the benefits, as AI demand boosts its financials and its stock.

Its GPUs are the standard for handling the heavy workloads for the development and deployment of such applications. AMD is one of the few companies that challenge NVIDIA's near monopoly and has been ramping up its AI efforts, with the CEO noting during the earnings call the desire to be a "significant player" in this market.

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Trying to compete with its rival on the AI data center chip front, it unveiled the MI300X AI GPU over the summer, with shipments expected during the current quarter. Ms Su said that MI300 will be the "fastest product to ramp to a billion dollars in sales" in AMD's history. She expects Data Center GPU to generate $400 million in the current quarter and exceed $2 billion in 2024, based on the rapid AI progress.

Following the H1 rally AMD.us dropped in the third quarter and in October. The stock is losing ground in today's pre-market as investors were underwhelmed by the forward guidance. The firm is making progress on the make-it-or-break-it AI front, but NVIDIA looks untouchable.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

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Retrieved 01 Mar 2024 https://ir.amd.com/financial-information/historical-financials

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