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Like larger rival Intel, chip designer AMD's shares fell in aftermarket trading after the firm managed to beat analyst revenue and EPS estimates for the first quarter by a hairline and met analyst forecasts for the current quarter's revenue. For its first quarter of 2024, AMD earned $5.47 billion in revenue and 62 cents in adjusted earnings per share, which were nearly in line with analyst estimates of $5.46 billion and 61 cents. Its guidance of $5.7 billion in second quarter sales also met analyst estimates, implying to investors that, as of now, the firm is seeing little growth, particularly when it comes to the significantly hyped artificial intelligence industry.
AMD Maintains End To End Product Portfolio Positioning For A.I. Use Cases
Unlike its larger rivals Intel and NVIDIA, AMD has the unique advantage of being able to offer both CPUs and GPUs for A.I. use cases. The firm has been positioning its products as such, and it maintained the trend today with the associated documents that are released along with every financial release also stressing the ''end to end'' nature of AMD's product portfolio.
Financially, the firm's first quarter marked high double digit percentage growth in its data center and client computing business divisions. These account for products that are sold to businesses for functions such as cloud computing and to consumers for their CPU needs. AMD's data center and client divisions marked 80% and 85% annual growths, respectively, with the development particularly important for the client division, which had posted an operating loss in the year ago quarter.
However, AMD's gaming division, which accounts for its GPU sales didn't do well in the March quarter. Sales fell by a painful 48% annually, with the firm ascribing the drop to "lower semi-custom Primarily due to lower revenue and Radeon GPU sales."
On the data center front, AMD, like others, was eager to mention its products for A.I. use cases. It shared that sales of the MI300 accelerator crossed the $1 billion mark since Q4 2023, with AMD's processors now powering cloud programs run by big ticket technology names the like of Google, Amazon and Oracle.
The gaming division's 48% annual revenue drop led to a 52% annual drop in operating income, and AMD ascribed this drop to lower sales of gaming consoles and its Radeon GPUs. While AMD's GPU products aren't widely well known for their A.I. use cases, shares of NVIDIA were down by 2% in the aftermarket in a jittery market that's eager to ditch big and small names at the slightest hint of A.I. weakness.
AMD's shares maintained their downward trend as well, and while they initially pared some of their losses to 3%, the dip continued as the earnings call began. At the time of publishing, the shares are down by 7.19%, as they reverse almost all gains made since the start of the year. AMD's shares had closed at $138 during the first trading day of 2024, and had touched $146 by the end of the first week of 2024. The 7.19% drop in today's aftermarket hours has left the stock trading at $147, after recovering from an earlier drop to $144.90.
