Beyond The Hype - Looking Past Management & Wall Street Hype

Beyond The Hype - Looking Past Management & Wall Street Hype

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Beyond The Hype - Looking Past Management & Wall Street Hype
Beyond The Hype - Looking Past Management & Wall Street Hype
AMD Strong Instinct Ramp Continue To Be Masked By Other Segments

AMD Strong Instinct Ramp Continue To Be Masked By Other Segments

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Beyond The Hype
Oct 30, 2024
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Beyond The Hype - Looking Past Management & Wall Street Hype
Beyond The Hype - Looking Past Management & Wall Street Hype
AMD Strong Instinct Ramp Continue To Be Masked By Other Segments
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Advanced Micro Devices (AMD) Q3 revenues beat expectations by $110M and grew 18% year over year. Record $6.8B was a result of significantly higher data center and client processor sales which more than offset declines in gaming and embedded product sales. On higher revenues, EPS did not beat expectations due to higher opex. The GAAP and non-GAAP difference in earnings continues to be large due to the large ongoing Xilinx acquisition related goodwill write-downs (image below).

Despite a surprise negative stock reaction to the beat, AMD’s results were very strong – especially when it came to Instinct sales. The all-important Instinct sales came in-line with BTH expectations, and above street expectations. The stock would have likely moved up if not for yet another unexpected steep shortfall in the Gaming segment which reduced the size of the beat. As can be seen from the table below, Gaming revenues fell a staggering 29% below the already low Q2 levels of $182M. If gaming was flat, AMD’s revenue beat would have been closer to $300M.

All other segments, Data Center, Client, and Embedded beat guidance and consensus comfortably. The Data Center segment in particular was strong and was up $700M quarter-over-quarter and grew 122% compared to the last year.

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Data Center Sizzles

At a record $3.5B, Data Center segment now contributes over 50% of the total company revenues. The segment is now also THE profit engine of the Company by a wide margin. Looking ahead, the upside for AMD investors is that as Data Center becomes bigger, the other segments will matter less – just like we saw with Nvidia (NVDA).

At $3.5B, AMD has almost assuredly passed Intel (INTC) in Data Center revenues this quarter. Within a span of a few quarters, Intel has fallen from being #1 in Data Center revenues to #3 behind Nvidia and AMD.

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