AMD talks up AI, but is really a mixed bag of emotions
AMD has been around for decades, has survived multiple economic downturns for the cyclical semiconductor industry, and come roaring back each time -- particularly in its run over the decade-plus following the great financial crisis of 2008-2009, and AMD's parting of ways with its manufacturing business GlobalFoundries. But this coming up cycle for chips is different.
Don't get me wrong, I'm an AMD shareholder too, and "fastest growing chip in AMD history" sounds pretty good. But let's put it in context. Total data center revenue was $1.6 billion last quarter, flat year over year (but better than chief rival Intel's 10% year-over-year data center sales decline to $3.8 billion). The rub here is that there's a lot more to the "data center" segment than AI chips. After booming cloud computing growth the last few years, the bulk of AMD's sales (primarily from EPYC CPUs and adaptive systems-on-chip), big data center operators are reallocating budgets to generative AI GPUs.
This obviously favors Nvidia right now, which has been reporting booming data center sales (over $10.3 billion in its last reported quarter alone) as new infrastructure to support generative AI is soaring. And meanwhile, that has the bulk of AMD's data center business in decline, so AI is merely offsetting that "old" data center infrastructure weakness. $Advanced Micro Devices (AMD.US)$ $NVIDIA (NVDA.US)$
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