San Francisco – Advanced Micro Devices, the leading challenger to Nvidia in AI computing chips, soared 16.5 per cent to new heights in late trading on May 5 after a flood of data centre spending bolstered its sales forecast.
Second-quarter revenue will be US$11.2 billion (S$14.3 billion), plus or minus US$300 million, the company said on May 5. That compares with an average analyst prediction of US$10.5 billion, according to data compiled by Bloomberg.
AMD’s upbeat outlook signals that it’s winning orders from the biggest spenders on artificial intelligence computing. Though Nvidia remains the dominant provider of AI processors, data centre customers are increasingly seeking alternatives – a trend that has helped AMD.
There’s a massive amount of money at stake. Alphabet’s Google, Amazon.com and other so-called hyperscalers have indicated that they will spend as much as US$725 billion (S$925 billion) in 2026 on AI.
AMD is the second-largest maker of AI accelerators – chips that are used to train and run AI services. It still trails Nvidia in that market by a wide margin.
AMD’s product lineup also includes microprocessors that serve as the heart of server computers, an area where it has taken market share from Intel. All three companies make graphics chips that are used in laptop and desktop PCs.
AMD’s first-quarter sales rose 38 per cent to US$10.3 billion. Profit, minus certain items, was US$1.37 a share. Analysts had predicted revenue of US$9.89 billion and earnings of US$1.28 a share.
Revenue at its data centre business grew 57 per cent to US$5.8 billion. Personal computer-related sales rose 23 per cent to US$3.6 billion.
AMD has benefited from renewed interest in its central processing units, or CPUs. That type of generalist chip is increasingly being deployed in gear used to run AI software.
The data centre CPU market will grow at “greater than 35 per cent annually, reaching over US$120 billion by 2030,” AMD said. As recently as November, at the company’s analyst day, it was forecasting an 18 per cent rate of increase.
“In response to this demand, we are working closely with our supply chain partners to meaningfully increase our wafer and back-end capacity to support this growth,” chief executive officer Lisa Su said on a conference call with analysts.
Ms Su also said the company had growing confidence in its ability to generate tens of billions of dollars in annual data centre revenue in 2027r. She expects to exceed AMD’s long-term growth target of greater than 80 per cent in the coming years.
The industry does face some challenges, though. Like other tech companies, AMD is contending with an unwanted side effect of the build-out in new AI data centres: a memory shortage. Computers in those facilities require a vast amount of high-performance memory chips.
That’s created an incentive for memory manufacturers to focus on that part of the business, rather than making as many of the regular chips used in laptops and other devices. The PC industry is projected to make fewer machines as a result.
“We are planning for second half PC shipments to be lower due to higher memory and component costs,” Ms Su said on May 5. “Against this backdrop, we still expect our client revenue to grow year-over-year and outperform the market.” BLOOMBERG
