AMD has raised its AI chip revenue forecast, expecting an additional $500 million in 2024, as supply constraints are projected to continue into 2025, according to a Reuters report. The surge in AI chip sales is fueled by increasing demand for advanced computing power in areas such as machine learning, data analytics, and autonomous systems. AMD’s AI chips, highly sought after by leading cloud service providers, are emerging as strong contenders to Nvidia, the current market leader.
Following this announcement, AMD’s stock rose by 7.5% in after-hours trading, while Nvidia shares gained 4.7%. Despite heavy investments in AI, some tech giants have yet to see significant returns. For example, Microsoft’s shares dropped by 6% on Tuesday, highlighting the difficulties in meeting cloud computing targets and suggesting that the full benefits of AI investments may take longer to materialize for major tech firms.
In the second quarter, AMD’s data center segment, which is its largest revenue source, experienced a 115% increase, reaching $2.8 billion, surpassing the expected $2.79 billion, according to Visible Alpha. Additionally, AMD’s quarterly AI chip revenue exceeded $1 billion for the first time.
Overall, AMD has projected third-quarter revenue of $6.7 billion, plus or minus $300 million, outpacing analysts’ average estimate of $6.61 billion, as reported by LSEG via Reuters.
The company revised its gross margin forecast to 53.5%, just shy of the estimated 53.6%. Total revenue for the second quarter increased by 9% to $5.8 billion, exceeding the projected $5.72 billion.
