AMD Q2 2023 Earnings: Expectation beating revenues, robust AI chipset demand drives AMD shares higher!
AMD stock was up by 2.80% as on Aug 2, 2023 at $117.60 per share after the company reported better than expected results for this quarter. The share price rose on earnings which topped analyst estimates as well as strong progress on AI Chips.
More importantly, this was driven by the planned launch of artificial-intelligence (AI) chips that could compete with Nvidia semiconductors. CEO Lisa Su said AMD is set to ramp up production of its flagship MI300 AI chips in Q4.
The accelerator chips, which are in short supply, are designed to compete against the advanced H100 chips already sold by Nvidia. To further support this, the CEO said customer interest in the MI300 series chips is "very high" and AMD expanded its work with "top-tier cloud providers, large enterprises and numerous leading AI companies" during the third quarter.
AMD Q2 2023: Historical Share Price Performance
| 1 month | 6 months | 1-year | 5-years |
| 1.54% | 33.17% | 18.44% | 536.02% |
(as on Aug 1, 2023)
AMD Q2 2023: Total Revenue
AMD on Aug 1, 2023 announced revenue for the second quarter of 2023 of $5.4 billion. This was down by 18% YoY. Further, client segment revenue was impacted by a weaker PC market and a significant inventory correction across the PC supply chain.
| Q2 2022 | Q2 2023 | YoY % change | |
| Total Revenue | $6.6 billion | $5.4 billion | -18% |
AMD Q2 2023: Segment Revenue Results
- Data Centre, Client, Gaming and Embedded Segment Overview
The company’s Data Centre segment revenue was down 11% YoY to $1.3 billion this quarter. This was primarily due to lower sales of the ‘3rd Gen EPYC’ processors. Likewise, the operating margin for the Data Centre segment too declined from 32% to 11% which was mainly due to lower revenue and increased R&D investments.
Further, the Client segment revenue fell by 54% YoY from $2.2 billion in the last quarter to $1 billion this quarter. This was because of the significant decline in processor shipments. As a result, due to lower revenue, the operating margin for the Client segment decreased from 32% to -7%.
Likewise, the Gaming segment revenue saw a slight decline of 4% YoY from $1.7 billion to $1.6 billion. Although there was a semi-custom revenue growth driven by healthy game console demand based on improved global retail availability and new AAA game launches, it was offset by lower gaming graphics revenue. The operating margin, however, saw an increase from 11% to 14% primarily due to higher semi-custom revenue.
Lastly, the Embedded segment revenue grew by 16% YoY to $1.5 billion. This was driven by strong performance in Industrial Vision and Healthcare, Automotive and Test and Emulation markets. As a result, the operating margin of the embedded segment increased too from 51% to 52%.
| Segments: | Q2 2022 | Q2 2023 | YoY % change |
| Data Centre Segment | $1,486 million | $1,321 million | -11% |
| Client Segment | $2,152 million | $998 million | -54% |
| Gaming Segment | $1,655 million | $1,581 million | -4% |
| Embedded Segment | $1,257 million | $1,459 million | 16% |
AMD Q2 2023: Net Income
AMD reported a net income which fell by 94% YoY to $27 million. This is mainly due to the $20 million loss in operating income along with the increase in operating expenses.
| Q2 2022 | Q2 2023 | YoY % change | |
| Net Income | $447 million | $27 million | -94% |
AMD Q2 2023: Financial Outlook
- Revenue = $5.7 billion +/- $300 million, with an increase of 2.5% year-on-year for Q3 2023. The company expects ‘Data Center and Client segment revenues to each grow by a double-digit percentage sequentially driven by increasing demand for their EPYC and Ryzen processors for FY 2023.
- Gross Margin = 51%
- Operating Expenses = $1.65 billion