In a triumphant finish to 2023, semiconductor and computer processor juggernaut Advanced Micro Devices (AMD) reported robust fourth-quarter earnings, maintaining its upward trajectory in the competitive tech landscape. The company’s Q4 revenue soared to $6.2 billion, marking a notable 10% surge compared to the previous year, aligning closely with analyst forecasts.
Driving this impressive revenue growth are AMD’s flourishing data center and client segments. The company continues to witness a steady surge in its data center division, fueled by the ramp-up of AMD Instinct GPUs and heightened demand for EPYC CPUs, setting new records in the process. Meanwhile, while the client segment experienced a relative plateau compared to the previous year, buoyed by brisk holiday sales, particularly of the AMD Ryzen 7000 Series processors.
However, amidst these triumphs, AMD also faced headwinds in its gaming and embedded segments, mirroring broader market trends. The gaming division witnessed a substantial downturn, with increased Radeon GPU sales only partially offsetting diminished revenue from semi-custom contracts with console manufacturers. Similarly, the embedded segment experienced a slowdown, attributed to inventory reduction maneuvers across various end markets.
AMD Charts Fiscal Year 2023 and Forward Outlook
Zooming out to assess the broader fiscal landscape, AMD’s total revenues for 2023 clocked in at $22.7 billion, showcasing a marginal 4% decline year-on-year. Despite commendable growth in the data center and embedded segments, this couldn’t fully counterbalance the slump in client and gaming revenues.
The company credits a 7% uptick in data center revenue to the robust demand for its AMD Instinct GPUs and the latest 4th Gen AMD EPYC CPUs. Notably, the embedded segment witnessed a substantial 17% surge, largely attributed to AMD's strategic acquisition of Xilinx for $35 billion in stock. In contrast, the client and gaming segments experienced declines of 25% and 9% respectively, attributed to softer demand in the PC and console markets.
Peering into the crystal ball of future prospects, AMD anticipates its Q1 revenue to hover around $5.4 billion, give or take $300 million. The company foresees data center revenue maintaining stability, with a seasonal dip in server sales counterbalanced by a surge in Instinct GPU revenues. However, a downturn is anticipated in client, embedded, and gaming segment sales.
CEO Lisa Su, in her prepared remarks, highlighted the shift in expectations, stating, “We now anticipate annual revenue to undergo a significant double-digit percentage decline year-over-year as supply aligns with demand in 2023, entering the fifth year of what has been a robust console cycle.”
