AMD’s weak forecast overshadows prospects for AI chips
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The outlook renewed concerns that customers are holding off on purchases in AMD’s core markets: PCs, servers, game consoles and programmable processors.
PHOTO: ADVANCED MICRO DEVICES
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San Francisco – Advanced Micro Devices (AMD) gave a weak revenue forecast even as the chipmaker predicted that new artificial intelligence processors would generate more money than expected this year.
First-quarter revenue will be about US$5.4 billion (S$7.2 billion), the company said on Jan 30. That was well short of the US$5.77 billion analysts had estimated and echoed rival Intel’s downbeat view of the PC and data centre chip markets. AMD shares fell more than 6 per cent in extended trading following the announcement.
The outlook renewed concerns that customers are holding off on purchases in AMD’s core markets: PCs, servers, game consoles and programmable processors.
Though the company is pushing into AI accelerators – a lucrative area where Nvidia dominates – it is still early in that expansion.
The company unveiled a line of AI accelerators in December called the MI300. Such chips help companies develop AI models by bombarding them with data, and they are in high demand.
AMD predicted sales of more than US$3.5 billion for the MI300 in 2024, up from an earlier forecast of US$2 billion.
But Wall Street has been predicting numbers as high as US$8 billion, according to Wolfe Research analyst Chris Caso.
AMD’s stock had been one of the favourite picks of investors looking for ways to bet on AI computing. Its shares have been the second-best performing stock on the Philadelphia Stock Exchange Semiconductor Index in 2024, after a similar performance in 2023.
The big question is whether AMD’s MI300 processors can challenge the dominance of Nvidia and its H100. That company’s revenue doubled in the latest fiscal year, according to estimates.
Intel, meanwhile, has suffered tepid demand in the market for programmable processors, an area where it also competes with AMD.
Those chips can have their function changed or updated even after they have been installed in electronic devices.
In its quarterly report last week, Intel said the lucrative market for data centre processors is weakening as well.
Three months ago, AMD had warned investors that demand for game console and embedded processors was slower. It reiterated that idea on Jan 30, saying that those markets will remain sluggish in 2024.
AMD is the second-largest maker of chips that go onto add-in graphics cards, which turn PCs into gaming machines. And it provides chips to both Sony Group and Microsoft for their consoles. Nvidia leads the market for PC add-in card chips.
AMD is also Intel’s largest rival in computer processors, the main component of laptops, desktops and server machines. BLOOMBERG
