AMD's GPU business for data centers will show strong growth next year

Chip giant AMD announced financial results for the third quarter, and although quarterly earnings exceeded analysts' expectations, earnings guidance for the fourth quarter fell short of market expectations.

In AMD's financial results for the quarter ending September, adjusted earnings per share were 70 cents, which exceeded the forecast of 68 cents, and sales were 5.8 billion dollars, up 4% from the same period last year compared to the forecast of 5.7 billion dollars.

Meanwhile, AMD expected sales for the fourth quarter to be around 6.1 billion dollars, and analysts predicted 6.37 billion dollars.

AMD's stock price initially fell about 4% in overtime trading, but it rebounded when the company revised its outlook for the artificial intelligence chip business upward.

AMD is one of the few chip manufacturers that can manufacture GPUs, and NVIDIA currently dominates this market. GPUs are mainly used for training and deploying generative AI models, and the AI boom led the GPU market this year.

Sales for the third quarter of AMD's data center division, which includes server processor CPUs and AI chip GPUs, were 1.6 billion dollars, unchanged from the same period last year. AMD anticipates strong growth in its data center business in the fourth quarter.

AMD's Chief Executive Officer (CEO) stated at the financial results briefing, “Currently, sales of GPUs for data centers reached about 400 million dollars in the fourth quarter and are expected to exceed 2 billion dollars in 2024.”

Also, in its financial results report, AMD mentioned that the AI chips MI300A and MI300X, which are scheduled to be released soon, will enter mass production this quarter.