AMD 2024-Q4 Earnings

Stocks A to Z
1

Hi, the next AMD earnings report is getting close, and it is time to consider the numbers again.

Intuitively, I think there is a good chance that the Q4 results will be pretty good. Barring any unforeseen stall in sales somewhere, and just modelling continued 24% quarter-on-quarter growth in the Data Centre segment (vs +25% in Q3), modest 6% growth in the Client segment (vs +26% in Q3), further 13% decline in the Gaming segment (vs -29% in Q3), and continued slow +8% recovery in the Embedded segment (same as in Q3), then my estimate lands on the very high end of the guided revenue range ($7.50B ± 0.30B).

The big question is the server GPU sales in the Data Centre segment. The market has a very pessimistic view on AMD’s competitiveness here, and if that really reflects customer sentiment, there is a chance that growth has slowed down, which will materially affect the numbers. However, I find that counter-intuitive, considering the AI revolution we are experiencing and the rapid progress AMD has made to get viable products to market (Instinct MI300X is running Copilot workloads for Microsoft and Llama workloads for Facebook at market leading efficiency and cost, while leading AI frameworks and model repositories already have AMD ROCm back-end support out of the box). Also, there are the Nvidia’s roadmap stumbles, which should have been a wake-up call to anyone without a second source.

Adding to the growth coming from server GPU sales, AMD now has a very comprehensive and competitive CPU portfolio across server and client segments. In particular, the chips with V-Cache are top performers in the gaming PC space. In the server market, EPYC is snowballing and taking further share with the impressive “Zen 5” generation.

In the supercomputing space, AMD is the chip vendor behind the fastest exa-scale supercomputers in the USA (Frontier and El Capitan), as well as the fastest supercomputer in the EU (LUMI). These machines run large-scale HPC and AI workloads on AMD EPYC and Instinct chips, solving the world’s biggest problems (without CUDA in sight).

Q4 should be a record-breaking quarter for AMD, with record revenue and perhaps even record operating income. Notably, the total operating income on a GAAP basis is now on a positive upwards trend, after having been slightly negative to just slightly positive since the Xilinx acquisition, due to the the high amortisation of the related cost (accounted for in the All Other segment). Analysts and pundits using GAAP numbers for stock valuation may start to take notice.

However, I’ve been wrong before, and I may very well be wrong again. Let me know your thoughts.

AMD Segment Results 2024 (estimated)
AMD Segment Results 2024 (estimated)1204Ă—1115 133 KB

(My spreadsheet is available at OneDrive.)

5 Likes
2

I bought AMD as my first stock. I paid $22.00 initially, then added more stocks at 47.00 a share. Totalling 33 shares. Then I forgot about it for the next 7 years. I checked it and it was up to $8,000.
I then sold some to diversify my portfolio.
I have a sweet spot for AMD and believe that the company is going to rally again.

1 Like
3

Nice! AMD was my first stock as well (outside ETFs). I have accumulated since 1999, averaging down through the doldrums, and I haven’t sold a single share yet!

They say you shouldn’t fall in love with a stock, but in this case, it has served me well. And now that AMD finds itself well-placed to become a big player in the amazing AI revolution, there might be major upswings yet to be had on this roller-coaster.

4

Good spreadsheet Vattila. Are you shading the post Xilinx time frame for a reason? Some investors on other boards, have criticised the price of the acquisition. I have insufficient data to judge.

I was in a business like AMD’s once as a shareholder and director. Once you start ramping up the business it’s very difficult to get off.
It’s a simple arithmetic progression. By the end of your accounting period, you have lets say, sales of 1x, giving a turnover of 0.5x for the year or other period. Next year you end the period with sales of 2x, giving a turnover of 1.5x. Now wer’e moving. Next year you end the period with sales of 3x, giving a turnover of 2.5x. Now you need to think about expanding sensibly trying to make a more complex equation where profits = a sensible proportion of turnover.
It was great fun.

This is year 1 for AMD data centre ramped sales. Hope it’s good.

2 Likes
5

Thanks!

I highlight the post-acquisition era in the spreadsheet, because the take-over marked the reorganisation into the current four business segments for accounting purposes, so the prior segment results are not directly comparable to results since. The gray numbers are AMD’s consolidated numbers, provided after the acquisition.

I have no issue with the Xilinx merger and was all for it. However, it is important to note that the high cost of the takeover, reflected as substantial amortisation, has materially affected the GAAP numbers ever since.

Agree. This year is going to be interesting, whatever happens.

It is noteworthy that AMD is currently valued substantially lower than during the period of uncertainty before the Xilinx deal was finalised — despite a successful acquisition and execution since, new AI opportunities, and with Intel knocked out and unconscious on the canvas. Arguably, AMD is in a stronger position than ever. But pessimism and market volatility are weighing on the stock.

However, I’m in it for the long haul. If it takes more than one year for Lisa Su to wear down Nvidia and for the market to notice, so be it.

— “We’re just getting started! The best is yet to come!” :slight_smile:

2 Likes
6

Recall that the same thing was said about the ATI purchase for many many years. And now the big data center GPUs are growing in a major way.

Year one for big data center GPUs…but probably couldn’t have happened nearly as fast without the prior ~5 years of big data center Epyc CPUs

Mike

2 Likes
7

Hey guys it has been a while since I posted to the AMD board. Just wanted to say that I agree 100% with Vattila. AMD has been a great ride for me and it is not over yet.

For those from the old crew who are wondering how my investment in AMD for my kids turned out… My daughter bought a house with the AMD investment I made for her and my son is still in it, although he did sell some last year to take advantage of other AI opportunities.

I have sold off about 30% of my stock to invest in other AI opportunities. I realized that I had neglected a dynamite strategy in my IRA accounts, so I am now reviewing and reallocating those portfolios more often. I am still holding hundreds of shares of AMD (more than good diversification would indicate) and will continue to hold them through 2025.

While 2024 AMD’s stock performance was disappointing and AI is grabbing the headlines, AMDs financial performance, strategic moves and continued growth has been great. This all seems very reminiscent of 2022, which was followed by 2023 when AMD stock price more than doubled.

AMD has a lot going for it in 2025. Some things people are not even discussing such as the Windows 10 EOL in October 2025. Just over 1.4 billion machines run windows 10. Many will not be able to upgrade to Windows 11.
While I cannot find any exact measurement considering my own company and talking to some IT support companies, it is looking like anywhere from 50%-60% will not be able to upgrade.

2025 looks like it could be a banner year for AMD across all markets.

3 Likes