AMD boosts AI chip forecast amid tight supply

AMD boosts AI chip forecast amid tight supply is profiled by BTW Media because published evidence links it to internet infrastructure, governance, operational dependencies, or market visibility.

• Advanced Micro Devices (AMD) raises its 2024 AI chip sales forecast to $4.5 billion and expects supply constraints to last until 2025, causing its shares to rise 7.5% in after-hours trading. 
• As demand surged, AMD’s chief executive Lisa Su says the company’s data centre revenues grow 115% to $2.8 billion in the Q2, the first time quarterly AI chip revenues exceeded $1 billion.

OUR TAKE
AMD has significantly increased its forecast for 2024 AI chip sales by $500 million, reflecting a strong demand for its AI chips and an expectation of continued supply constraints through 2025. This optimistic outlook, driven by surging demand from cloud computing giants and other AI-focused customers, has led to a substantial 7.5% rise in AMD’s share price during extended trading. The company’s AI chip sales, particularly in the data centre segment, have surged, with revenue surpassing $1 billion for the first time in the Q2.
-Rae Li, BTW reporter

What happened

AMD has revised its 2024 forecast for AI chip sales upwards by $500 million, now expecting revenue of $4.5 billion from this segment. The company’s CEO, Lisa Su, attributes this increase to surging demand for AI technology, which has led to a tight supply situation that is expected to persist through 2025. This adjustment reflects the company’s confidence in the growing importance of AI and its own position within the market. The announcement of this revised forecast sends AMD’s shares up by 7.5% in extended trading.

In the Q2, AMD’s data centre revenue experiences a significant jump of 115% to $2.8 billion, slightly exceeding analysts’ estimates of $2.79 billion. This growth was largely driven by the company’s AI chip sales, which for the first time exceeded $1 billion in a single quarter. The company’s AI chips are in high demand from cloud computing giants and other AI-focused customers, positioning AMD as a key player in the AI chip market. This surge in AI chip sales comes at a time when the broader tech industry is investing heavily in AI technology, with companies like Meta Platforms and Microsoft integrating AMD’s chips into their AI offerings.

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Why it’s important

AMD’s upward revision of its AI chip sales forecast to $4.5 billion for 2024 is significant as it highlights the rapidly growing demand for AI technology across various industries. This surge in demand, coupled with the expectation of continued supply constraints through 2025, underscores the critical role that AI chips play in the current technological landscape. The company’s ability to meet this demand and its optimistic outlook on the future of AI chip sales can position AMD as a formidable competitor to market leader Nvidia.

The substantial increase in AMD’s data centre revenue is also noteworthy. This growth not only reflects the company’s strong performance but also indicates a broader trend of increased investment in AI by major tech companies. This trend is likely to continue as more businesses look to integrate AI into their operations, further solidifying AMD’s position in the market and potentially reshaping the competitive dynamics within the AI chip industry.