AMD Reports Strong AI Chip Sales, Investors Unimpressed

AMD reported doubled sales for its data centre unit as demand rose for its AI chips, but the figures failed to impress investors, who sent its shares plummeting in after-hours trading on Monday.

Overall revenues were $6.82 billion (£5.24bn), beating analysts’ expectations of $6.71bn for the third quarter, but AMD’s revenue guidance was in line with what analysts had predicted.

That wasn’t good enough for investors, who sent AMD’s shares down 7 percent in after-hours trading.

The company’s shares had closed up nearly 4 percent, following a Reuters report that ChatGPT developer OpenAI has begun using AMD AI chips alongside Nvidia GPUs via its Microsoft Azure cloud infrastructure.

AI growth

Microsoft and Oracle offer AMD’s MI300X AI chips for rent via their respective cloud services.

AMD’s shares are up about 20 percent so far this year, as investors bet that it will be one of the companies to benefit from rollouts of AI services.

During an analyst call, AMD chief executive Lisa Su said Meta and Microsoft were expanding their use of AMD chips, as companies look for Nvidia alternatives to increase diversity.

Nvidia controls more than 80 percent of the AI chip market, which it largely created, and it is difficult for companies to switch to alternatives due to Nvidia’s entrenched ecosystem, which includes its CUDA software and networking equipment.

AMD raised its forecast for AI chip sales to $5bn this year from a $4.5bn prediction in July.

AMD’s data centre segment more than doubled its sales year-on-year to $3.5bn in total sales for the quarter, the company said.

Su said the MI325X AI chip, launched this month, should help boost sales.

Desktop chips

“Customer and partner interest for MI325X is high. Production shipments are planned to start this quarter,” she said.

AMD said it expects about $7.5bn in sales for the fourth quarter, roughly in line with expectations of $7.54bn, a 22 percent year-on-year decline for the quarter.

The company is the second-biggest AI chip supplier after Nvidia, but has had difficulties capitalising on increased demand due to production constraints at contract chip maker TSMC, which have also affected Nvidia.

AMD’s client segment grew 23 percent for the quarter to $1.19bn.

During the quarter its chips were included in laptops marketed by Microsoft as “Copilot+” systems with integrated AI capabilities.