AMD offsets weak PC gross sales with sturdy knowledge middle development

AMD sees sturdy continued demand for Xilinx embedded techniques and Pensando knowledge middle DPUs, in line with the CEO

Superior Micro Gadgets (AMD) on Tuesday issued fiscal third-quarter earnings that missed Wall Road expectations. The corporate reported Q3 income of $5.6 billion, gross margin of 42%, and an working lack of $64 million. The working loss was primarily the results of amortization of belongings related to AMD’s acquisition of Discipline Programmable Gate Array (FPGA) specialist Xilinx, the corporate stated.

Third quarter outcomes got here in under the corporate’s expectations due to the softening PC market, stated Dr. Lisa Su, AMD’s president and CEO. However the firm was capable of obtain 29% year-over-year income development based mostly on elevated gross sales of knowledge middle, embedded, and sport console merchandise, she stated. 

AMD is predicting a 14% rise in gross sales throughout the present quarter. That’s nonetheless under what some market analysts had been anticipating, however higher, general, than AMD rival Intel is providing for its present quarter, which despatched AMD’s inventory rising in after-hours trades on Tuesday and earlier than the market bell on Wednesday.

Income for AMD’s knowledge middle phase elevated 45% 12 months over 12 months to $1.6 billion. Cloud income greater than doubled 12 months over 12 months, Su famous, including that Microsoft Azure and Amazon, Tencent, Baidu and different hyperscalers spun up greater than 70 new AMD-powered situations throughout the quarter.

“Wanting on the broader aggressive panorama, our third-gen Epyc CPUs in market in the present day are the very best efficiency and most energy-efficient x86 server CPUs obtainable,” stated Su.

Su famous that AMD’s 12 months over 12 months knowledge middle GPU gross sales had been down; this time final 12 months AMD was delivery merchandise to fill the Frontier exascale supercomputer, made by Hewlett Packard and hosted on the Oak Ridge Management Computing Facility (OLCF) in Tennessee. Based mostly on the Cray EX, it’s the successor to an earlier system known as Summit. The system makes use of AMD CPUs and GPUs: 9,472 AMD Epyc processors and 37,888 Radeon GPUs. 

“We stay on observe to additional broaden our product portfolio in 2023 with the launches of our edge and telco-optimized Siena and cloud-optimized Bergamo processors,” stated Su.

Cloud adoption can also be driving gross sales of Pensando Information Processing Items (DPUs), Su stated. Pensando DPUs have been certified and validated by VMware to be used in its knowledge middle deployments choices from Dell, HPE and others. AMD acquired Pensando Methods earlier this 12 months. Su stated on the time of the acquisition, introduced in Might, that knowledge middle stays one of many firm’s largest development areas.

“Taking a step again, now we have constructed important momentum in our Information Heart enterprise as now we have persistently executed our server CPU highway map and expanded our options capabilities with the addition of the Xilinx and Pensando merchandise to our portfolio,” stated Su.

Xilinx additionally factored into AMD’s quarterly telco gross sales, stated Su.

“We noticed a specific power in North America led by new 5G wi-fi installations and expanded wired infrastructure deployments. Total demand for our Xilinx merchandise stays sturdy as we proceed to leverage AMD’s scale to safe further provide to deal with this demand,” she added. 

AMD CFO and treasurer Devinder Kumar supplied extra detailed steering for the present quarter.

“On a sequential foundation, Embedded and Information Heart segments are anticipated to develop, offset by declines within the Shopper and Gaming segments. As well as, for This fall 2022, we anticipate non-GAAP gross margin to be roughly 51%; non-GAAP working bills to be roughly $1.55 billion or 28% of income; non-GAAP curiosity expense, taxes and different to be roughly $175 million based mostly on a 13% efficient tax fee; and diluted share rely to be roughly 1.62 billion shares. For the complete 12 months, we anticipate income to be roughly $23.5 billion, plus or minus $300 million, a rise of roughly 43%, led by development within the Embedded and Information Heart segments. We anticipate non-GAAP gross margin to be roughly 52%,” stated Kumar.