3Q23 outperformance and AI optimism grants pardon over lacklustre forecast for 4Q23
- 3Q23 revenue and earnings beat; Revenue and EPS of US$5.8b and US$0.70 vs the street’s estimates of US$5.7b and US$0.68
- 4Q23 guidance of US$6.1m (+/-US$300m, +9% yoy, +5% qoq) fell short of analysts’ forecasts of US$6.4b
- Continues to be fueled by AI; Data centre GPU revenues to grow from US$400m in 4Q23 to over $2b in 2024
3Q23 revenue and earnings beat. Revenue and EPS amounted to US$5.8b and US$0.70, above the street’s estimates of US$5.7b and US$0.68 respectively. Revenue came in +4% yoy with growth in the client segment (+42% yoy) partially mitigated by weakness in gaming (-8% yoy) and embedded (-5% yoy) while the data segment was flat yoy. Non-GAAP gross margins expanded 140 bps to 51%, largely driven by strength in the client segment and product mix. Higher client segment revenue flowed through to EPS (+4% yoy).
4Q23 guidance of US$6.1m (+/-US$300m, +9% yoy, +5% qoq) fell short of analysts’ forecasts of US$6.4b. The Data Centre and Client segment is expected to report strong double-digit percentage growth yoy while gaming and embedded is likely to register declines given the current console cycle for gaming and elevated inventories for Embedded (industrial, automotives and networkng). The Data Centre segment which accounts for 28% of AMD’s 3Q23 revenue remains a key growth driver for AMD and will be the “largest incremental revenue contribution next year”. AMD continues to gain traction for its MI300 accelerators – shipments of MI300A APUs (Accelerated processing unit) had begun in Oct 23 while they remain on track to begin production shipments of MI300x GPU accelerators in the subsequent weeks. Moreover, AMD’s AI revenues are set to scale with data centre GPU revenues to grow from US$400m in 4Q23 to over $2b in 2024, which takes precedence over the tepid forecast for 4Q23.