HyperRace | AMD's Q2 Report Shines: Challenging NVIDIA's Position

Author: Zhou Yuan / Wall Street News

Before Samsung Electronics released its exciting financial report for the second quarter of 2024, AMD (Advanced Micro Devices) took the lead by releasing an encouraging financial report on July 30th local time in Santa Clara, California, United States. Subsequently, its stock price rose by 4.36% after the market closed.

AMD's financial report for the second quarter of this year showed that the company achieved a quarterly revenue of $5.8 billion, a year-on-year increase of 9% and a quarter-on-quarter increase of 7%; net profit was $265 million (non-GAAP net profit of $1.126 billion), a year-on-year increase of 881% (exceeding Wall Street analysts' expectations) and a quarter-on-quarter increase of 115%.

AMD's Chairman and CEO, Su Zifeng, believes that the growth in performance in the second quarter was mainly due to the "record revenue of the Data Center (IDC) division" and the "continued accelerated development of the AI business". It is noted that AI contributed to over 50% of the revenue in this quarter.

Furthermore, starting from the third quarter of 2023, the IDC business became the largest contributor to AMD's revenue. The revenue-generating products of AMD's IDC division mainly come from the AI accelerator card MI300 and EPYC CPUs.

On July 31st, AMD raised the sales guidance for data center GPUs in 2024 and claimed, "It is expected that the sales of data center GPUs in 2024 will be $4.5 billion, up from the previous expectation of $4 billion; Microsoft's usage of the MI300 chip has increased; the revenue from the MI300 chip in the second quarter exceeded $1 billion; and AMD will introduce new AI processors annually."

The financial report shows that AMD's IDC business unit achieved a record high revenue of $2.8 billion in the quarter (since the third quarter of 2023), a year-on-year increase of 115% and a quarter-on-quarter increase of 21%, thanks to the significant increase in shipments of AMD Instinct GPUs and strong sales growth of the fourth-generation AMD EPYC CPUs.

Jean Hu, AMD's Executive Vice President, Chief Financial Officer, and Finance Director, stated, "AMD's revenue in the second quarter exceeded the midpoint of our performance guidance, driven by strong growth in the Data Center and Client business units. In addition, we expanded our gross margin, achieved robust revenue growth, and increased strategic investments in the AI field, laying a foundation for future growth."

The revenue of the Client business unit this quarter was $1.5 billion, a year-on-year increase of 49% and a quarter-on-quarter increase of 9%, mainly benefiting from the sales growth of AMD Ryzen processors.

Apart from the strong performance of these two units, the other two units, the Gaming business unit and the Embedded business unit, did not perform as well.

The Gaming business unit had a revenue of $648 million in the second quarter, a year-on-year decrease of 59% and a quarter-on-quarter decrease of 30%, mainly due to a decrease in semi-custom business revenue; the Embedded business unit had a revenue of $861 million in the quarter, a year-on-year decrease of 41%, mainly due to continued customer inventory adjustments, with a 2% increase in revenue quarter-on-quarter.

Su Zifeng is very confident about the future performance Su Zifeng said, "Driven by the market demand for the Instinct series, EPYC, and Ryzen processors, AMD is well prepared for strong revenue growth in the second half of the year. The rapid development of generative AI is driving higher demand for computing power in various markets. As we integrate leading AI solutions across all business lines, this creates significant growth opportunities for us."

Regarding Jean Hu's statement about "increased strategic investments in the AI field," Wall Street News reviewed AMD's recent developments and found that the company, in addition to maintaining normal technical iterations for GPUs and CPUs, is quietly expanding its "circle of friends" by building an industry ecosystem through the acquisition of software companies. The industry is well aware of the "blessing effect" of CUDA on NVIDIA's AI acceleration cards.

On July 10th, AMD announced that it would spend approximately $665 million (about RMB 4.817 billion) in cash to acquire the Finnish artificial intelligence startup Silo AI. This move aims to enhance AMD's AI chip capabilities and improve competitiveness with industry leader NVIDIA.

AMD stated that the acquisition of Silo AI will help improve the development and deployment of AI models, assist potential customers in using AMD chips to build complex AI models, and strengthen AMD's software development capabilities.

Silo AI focuses on end-to-end AI-driven solutions that help customers integrate this technology into their products and services.

The acquisition of Silo AI is the latest in AMD's many software initiatives. In 2023, AMD also acquired the AI software companies Mipsology and Nod.ai; in the past 12 months, AMD has invested over $125 million in more than a dozen AI companies.

In 2022, AMD acquired the FPGA giant Xilinx, engaging in direct competition with Intel's CPU+FPGA technology route with its CPU+GPU+FPGA model.

If given time, once AMD's software ecosystem takes shape, will NVIDIA, as the dominant player, continue to have its good days?