AMD's financial report/forecast exceeds expectations, AI data center business performs well, stock price surges by 15% after closing

AMD estimates that its revenue for this quarter (Q2) will reach $11.2 billion, with a fluctuation of $300 million, higher than the market estimate of $10.5 billion. CEO Su Zifeng stated that AMD is working closely with its supply chain partners to significantly increase wafer and back-end packaging capacity in response to strong demand.

After the announcement, AMD's stock price surged by over 15% in after hours trading. The stock closed up 4% to $355.26 in New York on Tuesday, and has risen 66% so far this year.

This outlook indicates that AMD is winning orders from the largest customer in the AI computing field. Although Nvidia still dominates the AI processor market, data center customers are increasingly seeking alternative solutions, such as AMD.

AMD's Q1 revenue increased by 38% year-on-year to $10.25 billion, exceeding market estimates of $9.89 billion; After adjustment, the earnings per share were $1.37, which is also better than the market estimate of $1.28. Net profit increased from $709 million in the same period last year to $1.38 billion.

Among them, the annual revenue of data center business increased by 57% to 5.8 billion US dollars; Personal computer related revenue also grew by 23% to $3.6 billion.

Su Zifeng stated that the data center business has now become the main driving force for AMD's revenue and profit growth. The company is more confident that its data center AI revenue will reach tens of billions of dollars next year and expects to exceed its long-term growth target of 80% in the coming years.

AMD is the world's second-largest AI accelerator supplier, second only to NVIDIA. As large cloud service providers actively expand their AI infrastructure, AMD is gradually expanding its market share. Google, Amazon, and other large-scale cloud service providers under Alphabet may have a total AI capital expenditure of up to $725 billion by 2026.

AMD also sees a rebound in CPU demand. The rise of proxy AI has led to a renewed emphasis on CPUs in the market. AMD estimates that the annual growth rate of the data center CPU market will exceed 35% in the future, and the scale is expected to exceed $120 billion by 2030, higher than the estimated 18% in November last year.

In addition, AMD expects to ship the complete rack level AI data center system "Helios" in the second half of this year, competing with the Grace Blackwell system from NVIDIA. OpenAI has signed a procurement agreement with Meta.

However, the AI boom has also brought about a shortage of memory. AMD pointed out that the surge in demand for high bandwidth memory, limited advanced packaging capacity, and supply chain pressure caused by the Iran War are driving up costs. Su Zifeng stated that PC shipments may decline in the second half of the year, but client revenue is still expected to maintain annual growth.