AMD Targets $4 Billion in AI Chip Sales by Year-End

By the end of 2024, AMD aims to generate $4 billion in revenue from the sale of artificial intelligence chips.

In its first-quarter report, the company noted that its data center segment grew by 80% year-on-year, reaching $2.3 billion. This growth was driven by sales of its MI300 series AI chips, which compete with Nvidia’s graphics processors.

AMD’s CEO, Lisa Su, stated that clients such as Microsoft, Meta, and Oracle are utilizing AMD’s MI300X. Since their launch in the fourth quarter of 2023, these accelerators have generated $1 billion in revenue.

AMD expects AI chip sales to reach $4 billion in 2024, surpassing its January forecast of $3.5 billion. In comparison, Nvidia, the largest supplier of server chips, reported $18.4 billion in sales in the data center segment in its latest financial report.

Su informed investors that the company is developing new AI chips and successors to the current generation. 

“We are getting much closer to our leading AI customers. They are effectively giving us significant feedback on our roadmap,” said the head of AMD.

The company also produces central processing units, often used alongside advanced AI chips in servers. According to Su, AMD has gained market share in this segment, likely at Intel’s expense.

She noted “signs of improving demand” for the company’s processors due to the AI server boom.

AMD’s Financial Performance Exceeds Analyst Expectations

In the first quarter of 2024, AMD’s revenue reached $5.47 billion, slightly above the LSEG consensus forecast of $5.46 billion and 2% higher than the same reporting period last year. The company’s profit was $123 million, compared to a loss of $139 million a year earlier.

For the current quarter, AMD expects sales of $5.7 billion, aligning with analyst forecasts. This represents a growth of approximately 6% year-on-year.

AMD’s weakest division was its gaming segment, which declined by 48% year-on-year to $922 million, below forecasts of $969 million. The company attributed this to a drop in chip sales for gaming consoles and PCs.

AMD’s core business—processors for chips and PCs—reported sales of $1.4 billion, up 85% from last year, which may indicate a market recovery following last year’s downturn.

The company’s embedded segment, comprising Xilinx products, reported a 46% drop in sales to $846 million, below analyst expectations of $942 million.

Despite a generally profitable quarter and strong forecasts, AMD shares fell by 7% in after-hours trading on April 30.

In April, Microsoft reported a shortage of cloud infrastructure for AI despite a 79% increase in capital expenditures.