AMD rakes in cash with best quarterly revenue ever amid datacenter business rise, but gaming business craters

AMD on Tuesday announced its financial results for the third quarter of 2024. With a revenue of $6.819 billion, the company posted its best quarter ever as its datacenter unit enjoyed record sales. While the company’s client business also performed well year-over-year, its gaming and embedded businesses were down rather dramatically compared to the same quarter a year ago. 

AMD’s revenue reached $6.819 billion, up 18% year-over-year, in the third quarter of 2024, whereas its net income increased to $771 million, a 158% rise compared to the same quarter in 2023. AMD’s gross margin rose to 50%, up 3% year-over-year. 

“We delivered strong third quarter financial results with record revenue led by higher sales of EPYC and Instinct datacenter products and robust demand for our Ryzen PC processors,” said Dr. Lisa Su, chief executive of AMD. “Looking forward, we see significant growth opportunities across our datacenter, client and embedded businesses driven by the insatiable demand for more compute.”

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Datacenter CPUs and GPUs set records

AMD’s datacenter business earned $3.5 billion in revenue, up 122% year-over-year, as the company ramped up production of its EPYC ‘Turin’ processors based on the Zen 5 microarchitecture as well as increasing sales of its Instinct MI300X accelerators for AI and HPC workloads that have now be adopted by Microsoft, Oracle, and AI-specialized cloud service providers. Operating income of this unit exceeded a billion of dollars and reached $1.041 billion (up 240% YoY), another first for the company.

Client business unit remains strong

Sales of AMD’s client business unit totaled $1,881 billion in Q3 2024, up 29% from the third quarter of 2023. During the quarter AMD began to sell its Zen 5-based CPUs for desktops and laptops, which almost certainly had an effect on its revenue. Yet, it is likely that recovery of the PC market and expected demand for client processors also played a role.

Gaming business collapses 69% year-over-year

While AMD’s datacenter business unit pleases with its results, the company’s gaming business is nothing but a disappointment, something that the company pre-announced earlier this year. 

During the third quarter, AMD’s gaming business earned $462 million, down from $1.506 billion in the third quarter of the previous year as a result of dropping sales of Radeon graphics processors as well as inventory adjustments by Microsoft and Sony as their gaming consoles enter their fourth year on the market. So far, Sony’s PlayStation 5 Pro did not have any positive impact on AMD’s performance, it seems. Despite its massive revenue drop, AMD’s gaming unit remained profitable with an operating income of $12 million.

Embedded business also down

AMD’s Embedded division — formerly Xilinx — posted $927 million in revenue, reflecting a 25% decrease from the same quarter a year ago, but slightly up from $861 million in the previous quarter. Operating income of the business unit was $372 million, down 39% YoY.

Outlook

AMD anticipates that its revenue for the fourth quarter of 2024 will be approximately $7.5 billion ±$300 million, whereas its gross margin is projected to increase to 54% as sales of its datacenter hardware gets higher. This projection reflects an estimated year-over-year revenue growth of around 20% and a sequential increase of about 10% at the midpoint of the forecast range.