AMD reports strong earnings despite plummeting gaming revenue

AMD reports mixed earnings as strong growth is countered by poor gaming revenue

AMD have just released their Q1 2024 earnings, and they have reported strong growth for their AI and CPU segments. Gross margins is now up to 47%, and revenues are up year over year. Even so, poor performance in some areas has some analysts worried.

For their Data Center and Client revenues, AMD has reported staggering 80% and 85% year over year gains. Simply put, the growth in these areas is astounding. This growth has been lead by strong AMD Instinct GPU sales, EPYC CPU sales, and Ryzen 8000 processor sales.

Despite these huge gains, AMD’s total Q1 2024 revenue was only up 2% year over year. This is due to a 48% drop in revenue from their Gaming segment and a 46% drop in their Embedded revenue. These drops are due to declining semi-custom sales, lowered AMD Radeon GPU sales, and lower embedded sales. These lowered Radeon GPU sales are likely the reason why MSI has decided to shift its focus to Nvidia RTX products.

Stong AI earnings, poor gaming revenues for AMD

Lowered semi-custom sales are expected at this point in the life cycle of current-generation consoles. Console sales get lower as we reach later into each system’s life cycle. This means that AMD’s semi-custom revenues are strong when new consoles launch, and lower when we reach the latter parts of a system’s life cycle. AMD’s semi-custom sales may rise again when Sony launches their long-rumoured PlayStation 5 Pro console.

As for Radeon, AMD’s poor revenues can be explained, at least in part, by a lack of product launches. Q1 2023 was the quarter after AMD’s RX 7900 series launch, and AMD has not had a product launch to power sales in Q1 2024. Beyond that, AMD are now competing with Nvidia’s RTX 40 SUPER series, which places AMD in a weaker position within the gaming market.

Overall, AMD is in a strong position when it comes to the CPU market and the emerging AI market. That said, AMD’s AI revenues are small when compared to Nvidia’s, and the company’s weak gaming and embedded sales have countered gains in other areas. AMD expects growth in 2024 to come primarily from their upcoming Zen 5 CPUs and their AMD Instinct AI accelerators.

You can join the discussion on AMD’s strong earnings on the OC3D Forums.

Mark Campbell

Mark Campbell

A Northern Irish father, husband, and techie that works to turn tea and coffee into articles when he isn’t painting his extensive minis collection or using things to make other things.

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