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    AMD
    Earnings call· Dec 2024(Q4 FY24)

    ADVANCED MICRO DEVICES INC AMD

    Feb 4, 2025 Source

    Executive summary

    Advanced Micro Devices, Inc. Q4 FY24 — Record Revenue Driven by Data Center AI and Client Growth

    AMD concluded FY24 with record quarterly and annual revenue, propelled by significant growth in its Data Center AI and Client segments. The company is accelerating its AI hardware roadmap, with the MI350 series now expected to ramp production by mid-year, and is seeing strong adoption of its EPYC and Ryzen processors. While Gaming and Embedded segments faced headwinds, management anticipates a strengthening demand environment across all businesses in 2025, projecting strong double-digit revenue and EPS growth.

    Highlights

    5

    • Q4 revenue increased 24% year-over-year to a record $7.7 billion, exceeding expectations.

    • Data Center segment revenue grew 69% year-over-year to a record $3.9 billion, driven by Instinct GPUs and EPYC CPUs.

    • Client segment revenue increased 58% year-over-year to a record $2.3 billion, fueled by strong Ryzen processor demand.

    • Data Center AI business delivered greater than $5 billion in revenue for the full year 2024.

    • MI350 series production ramp accelerated to mid-year, earlier than previously planned.

    Concerns

    3

    • Gaming segment revenue declined 59% year-over-year to $563 million due to decreased semi-custom sales.

    • Embedded segment revenue decreased 13% year-over-year to $923 million, reflecting mixed end-market demand.

    • Operating expenses increased 23% year-over-year to $2.1 billion, driven by R&D and marketing investments.

    Guidance & targets

    15
    CategoryTargetConfidence
    Q1 2025 Revenue
    $7.1 billion +/- $300 million
    high materiality
    High
    Q1 2025 Non-GAAP Gross Margin
    approximately 54%
    medium materiality
    High
    Q1 2025 Non-GAAP Operating Expenses
    approximately $2.1 billion
    medium materiality
    High
    Q1 2025 Non-GAAP Other Net Income
    $24 million
    low materiality
    High
    Q1 2025 Non-GAAP Effective Tax Rate
    13%
    low materiality
    High
    Q1 2025 Diluted Share Count
    approximately 1.64 billion shares
    low materiality
    High
    Full Year 2025 Revenue Growth
    strong double-digit percentage
    high materiality
    High
    Full Year 2025 EPS Growth
    strong double-digit percentage
    high materiality
    High
    Client Segment Revenue Growth
    well ahead of the market
    medium materiality
    High
    Data Center AI Revenue
    tens of billions of dollars
    high materiality
    High
    Gaming and Embedded Businesses Growth
    modest increases
    medium materiality
    Medium
    Data Center Segment Growth
    strong double-digit percentage
    high materiality
    High
    Data Center GPU Business Growth
    strong double-digit percentage
    high materiality
    High
    Data Center GPU Revenue Progression
    second half would be stronger than the first half
    medium materiality
    High
    Gross Margin Progression
    step up in second half
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Data Center
    Record revenue driven by strong growth in both AMD Instinct GPU and fourth and fifth generation AMD EPYC CPU sales. Operating income increased to $1.2 billion or 30% of revenue compared to $666 million or 29% a year ago.
    EPYC cloud instances: increased 27% in 2024 to >1,000Enterprise consumption of EPYC in the cloud: nearly tripled from 2023EPYC platforms available: >450EPYC Turin platforms in production: >120 in Q4
    		$3.9 billion69%—$1.2 billion (30% of revenue)
    Client
    Record revenue driven by strong demand for AMD Ryzen processors. Operating income was $446 million or 19% of revenue compared to $55 million or 4% of revenue a year ago, driven primarily by operating leverage from higher revenue.
    Desktop channel sell-out: record in Q4OEM PC sell-through share: record in Q4
    		$2.3 billion58%—$446 million (19% of revenue)
    Gaming
    Revenue declined primarily due to a decrease in semi-custom revenue as Microsoft and Sony focused on reducing channel inventory. Operating income was $50 million or 9% of revenue compared to $224 million or 16% a year ago.
    Console cumulative unit shipments: surpassing $100 million in Q4
    		$563 million-59%—$50 million (9% of revenue)
    Embedded
    Revenue decreased as end market demand continues to be mixed, with strength in aerospace and defense and test and emulation offset by softness in industrial and communications markets. Operating income was $362 million or 39% of revenue compared to $461 million or 44% a year ago.
    Design wins: $14 billion in 2024, up >25% YoY
    		$923 million-13%—$362 million (39% of revenue)

    Operational metrics

    15
    Non-GAAP Operating Expenses
    $2.1 billionup 23% YoY
    Q4 FY24

    Increased as AMD invests in R&D and marketing activities to address growth opportunities.

    Operating Income
    $2 billion
    Q4 FY24

    Record operating income for the quarter.

    Non-GAAP Diluted EPS
    $1.09up 42% YoY
    Q4 FY24

    Reflecting significant operating leverage of the business model.

    Inventory
    $5.7 billionincreased $360 million sequentially
    end of Q4 FY24

    Balance at the end of the quarter.

    Cash and investments balance
    $5.1 billion
    end of Q4 FY24

    Cash, cash equivalents and short-term investments at the end of the quarter.

    Shares repurchased
    1.8 million shares
    Q4 FY24

    Shares repurchased and capital returned to shareholders during the quarter.

    Shares repurchased
    5.9 million shares
    FY24

    Shares repurchased and capital returned to shareholders for the full year.

    Remaining share repurchase authorization
    $4.7 billion
    Q4 FY24

    Remaining amount authorized for share repurchases.

    Annual Revenue
    $25.8 billionup 14%
    FY24

    Record annual revenue for fiscal year 2024.

    Data Center segment annual growth
    94%
    FY24

    Growth in the Data Center segment for the full year.

    Client segment annual growth
    52%
    FY24

    Growth in the Client segment for the full year.

    Annual Net Income Growth
    26%
    FY24

    Growth in net income for the full year.

    Gross Margin Expansion
    300 bps
    FY24

    Gross margin expansion for the full year.

    PC TAM growth
    mid-single-digit percentageYoY
    2025

    Expected growth for the total addressable market for PCs in 2025.

    MI300X inferencing performance increase
    2.7x
    since launch

    Increase in MI300X inferencing performance due to ROCm 6.3 enhancements.

    Industry KPIs

    5
    MetricValueDetails
    Ai data center revenue>$5 billionUSD
    Design wins socket pipeline$14 billionUSD
    Inventory channel inventory$5.7 billionUSD
    Node platform ramp scheduleMI325X volume production in Q4; MI350 series production shipments mid-year; MI400 series launch in 2026
    End market segment revenue mixData Center: $3.9B; Client: $2.3B; Gaming: $563M; Embedded: $923MUSD

    Product announcements

    5
    ProductTypeDetails
    Ryzen mobile processorslaunch
    Radeon 9000 series GPUslaunch
    Versal RF serieslaunch
    Versal premium series Gen 2launch
    Next-gen Alveo cardlaunch

    Deals & partnerships

    2
    ZT SystemsAcquisition of ZT Systems to accelerate time to market for Instinct accelerator platforms.

    Received unconditional regulatory approvals in multiple jurisdictions (Japan, Singapore, Taiwan). Plan to divest ZT's U.S.-based Data Center infrastructure production capabilities shortly after closing.

    DellStrategic collaboration to offer a full portfolio of commercial PCs powered by Ryzen Pro processors.

    Initial wave of Ryzen-powered Dell commercial notebooks planned to launch in spring, with full portfolio ramping in H2.

    Risks & headwinds

    3
    Gaming segment declineQ4 FY24

    Revenue declined 59% YoY to $563 million

    Mitigation: Channel inventories have normalized; semi-custom sales expected to return to more historical patterns in 2025.

    Embedded segment demand softnessQ4 FY24

    Revenue decreased 13% YoY to $923 million

    Mitigation: Strength in aerospace and defense and test and emulation is offsetting softness in industrial and communications markets. Well positioned for ongoing share gains based on design win momentum.

    Increased operating expensesQ4 FY24

    Operating expenses were $2.1 billion, an increase of 23% YoY

    Mitigation: These are strategic investments in R&D and marketing activities to address significant growth opportunities, particularly in AI.

    What to watch in Q1 FY25

    5

    MI350 Series Production Ramp

    mid-year
    CurrentSilicon validation ahead of schedule, sampling lead customers this quarter
    TargetProduction shipments by mid-year

    Why it matters

    Accelerates AI hardware roadmap, improves competitiveness, and is a key catalyst for H2 Data Center GPU growth.

    Based on early Silicon progress and the strong customer interest in the MI350 series, we now plan to sample lead customers this quarter and are on track to accelerate production shipments to mid-year.

    Q&A highlights

    8

    How should we think about the Data Center GPU business in 2025, particularly the revenue progression between the first and second halves?

    AMD expects strong double-digit growth for the overall Data Center business, including Data Center GPUs, in 2025. The second half is anticipated to be stronger than the first half, primarily driven by the MI350 series ramp.

    “the overall Data Center business will grow strong double digits certainly, both the server product line as well as the Data Center GPU product line will grow strong double digits. And from the shape of the revenue you would expect that the second half would be stronger than the first half, just given 350 will be a catalyst for the Data Center GPU business.”

    asked by Aaron Rakers · answered by Lisa Su

    2 min read6 chapters

    Detailed Narrative

    01

    Data Center AI Acceleration and Roadmap

    AMD's Data Center AI business achieved over $5 billion in revenue for 2024, with MI300X production deployments expanding across major cloud partners like Meta and Microsoft. The company began volume production of MI325X in Q4 and accelerated the MI350 series production ramp to mid-year due to strong customer demand and ahead-of-schedule silicon validation. Development of the MI400 series is also progressing well, targeting a 2026 launch with rack-scale solutions and integrated networking.

    02

    EPYC CPU Market Share Gains

    The EPYC CPU business saw significant momentum, with share gains accelerating in 2024, particularly with the ramp of fifth-gen EPYC Turin. AMD exited 2024 with over 50% share at most large hyperscale customers, and enterprise consumption of EPYC in the cloud nearly tripled from 2023. Over 450 EPYC platforms are now available from leading OEMs and ODMs, including more than 120 Turin platforms that went into production in Q4, positioning AMD for continued growth in 2025.

    03

    Client Segment Resurgence and AI PC Leadership

    The Client segment delivered record revenue, driven by strong demand for Ryzen desktop and mobile processors. AMD achieved record desktop channel sell-out during the holiday season and record OEM PC sell-through share in Q4. The company expanded its Ryzen portfolio with 22 new mobile processors at CES and announced a new strategic collaboration with Dell for commercial PCs, aiming to grow client segment revenue well ahead of the projected mid-single-digit PC TAM growth in 2025.

    04

    ROCm Software Stack Enhancements

    Significant progress was made across the ROCm software stack in 2024, with ROCm 6.3 delivering multiple performance optimizations, including a 3x faster Flash Attention algorithm and SGLang runtime support for state-of-the-art models. These enhancements led to a 2.7x increase in MI300X inferencing performance since launch. AMD is increasing software investments, delivering biweekly container releases, and dedicating resources to the open-source community to accelerate innovation.

    05

    ZT Systems Acquisition and Strategic Divestiture

    AMD passed key milestones in the acquisition of ZT Systems, receiving unconditional regulatory approvals in multiple jurisdictions. The company plans to divest ZT's U.S.-based Data Center infrastructure production capabilities shortly after closing the acquisition, which remains on track for the first half of the year. This acquisition is expected to accelerate time to market for future Instinct accelerator platforms.

    06

    Segment Reporting Change

    Beginning with the first quarter of fiscal year 2025 financial statements, AMD will combine the Client and Gaming segments into a single reportable segment, aligning with internal management structure. The company will continue to provide distinct revenue disclosures for Data Center, Client, Gaming, and Embedded businesses, but will report three segments: Data Center, Client with Gaming, and Embedded.

    AI-generated summary of the company’s earnings call. Not investment advice.