AMD offsets weak PC gross sales with robust knowledge heart development

AMD sees robust continued demand for Xilinx embedded methods and Pensando knowledge heart DPUs, in line with the CEO

Superior Micro Gadgets (AMD) on Tuesday issued fiscal third-quarter earnings that missed Wall Road expectations. The corporate reported Q3 income of $5.6 billion, gross margin of 42%, and an working lack of $64 million. The working loss was primarily the results of amortization of property related to AMD’s acquisition of Discipline Programmable Gate Array (FPGA) specialist Xilinx, the corporate mentioned.

Third quarter outcomes got here in under the corporate’s expectations due to the softening PC market, mentioned Dr. Lisa Su, AMD’s president and CEO. However the firm was capable of obtain 29% year-over-year income development primarily based on elevated gross sales of information heart, embedded, and sport console merchandise, she mentioned. 

AMD is predicting a 14% rise in gross sales through the present quarter. That’s nonetheless under what some market analysts have been anticipating, however higher, total, than AMD rival Intel is providing for its present quarter, which despatched AMD’s inventory rising in after-hours trades on Tuesday and earlier than the market bell on Wednesday.

Income for AMD’s knowledge heart section elevated 45% 12 months over 12 months to $1.6 billion. Cloud income greater than doubled 12 months over 12 months, Su famous, including that Microsoft Azure and Amazon, Tencent, Baidu and different hyperscalers spun up greater than 70 new AMD-powered cases through the quarter.

“Trying on the broader aggressive panorama, our third-gen Epyc CPUs in market as we speak are the very best efficiency and most energy-efficient x86 server CPUs obtainable,” mentioned Su.

Su famous that AMD’s 12 months over 12 months knowledge heart GPU gross sales have been down; this time final 12 months AMD was transport merchandise to fill the Frontier exascale supercomputer, made by Hewlett Packard and hosted on the Oak Ridge Management Computing Facility (OLCF) in Tennessee. Primarily based on the Cray EX, it’s the successor to an earlier system referred to as Summit. The system makes use of AMD CPUs and GPUs: 9,472 AMD Epyc processors and 37,888 Radeon GPUs. 

“We stay on monitor to additional develop our product portfolio in 2023 with the launches of our edge and telco-optimized Siena and cloud-optimized Bergamo processors,” mentioned Su.

Cloud adoption can also be driving gross sales of Pensando Knowledge Processing Models (DPUs), Su mentioned. Pensando DPUs have been certified and validated by VMware to be used in its knowledge heart deployments choices from Dell, HPE and others. AMD acquired Pensando Methods earlier this 12 months. Su mentioned on the time of the acquisition, introduced in Might, that knowledge heart stays one of many firm’s largest development areas.

“Taking a step again, we’ve got constructed important momentum in our Knowledge Heart enterprise as we’ve got constantly executed our server CPU highway map and expanded our options capabilities with the addition of the Xilinx and Pensando merchandise to our portfolio,” mentioned Su.

Xilinx additionally factored into AMD’s quarterly telco gross sales, mentioned Su.

“We noticed a selected energy in North America led by new 5G wi-fi installations and expanded wired infrastructure deployments. Total demand for our Xilinx merchandise stays robust as we proceed to leverage AMD’s scale to safe further provide to deal with this demand,” she added. 

AMD CFO and treasurer Devinder Kumar provided extra detailed steerage for the present quarter.

“On a sequential foundation, Embedded and Knowledge Heart segments are anticipated to develop, offset by declines within the Shopper and Gaming segments. As well as, for This fall 2022, we anticipate non-GAAP gross margin to be roughly 51%; non-GAAP working bills to be roughly $1.55 billion or 28% of income; non-GAAP curiosity expense, taxes and different to be roughly $175 million primarily based on a 13% efficient tax fee; and diluted share rely to be roughly 1.62 billion shares. For the complete 12 months, we anticipate income to be roughly $23.5 billion, plus or minus $300 million, a rise of roughly 43%, led by development within the Embedded and Knowledge Heart segments. We anticipate non-GAAP gross margin to be roughly 52%,” mentioned Kumar.

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