NEW YORK: Advanced Micro Devices (AMD) has forecast fourth-quarter revenue above market estimates, betting on the multi-billion-dollar expansions of data centre infrastructure to boost demand for its artificial intelligence (AI) chips.
AMD has received significant investments in AI hardware from companies such as ChatGPT maker OpenAI and the US Department of Energy, as investors expect spending on advanced processors will continue.
But fears remain that the AI boom has created mounting risks as it is still unclear whether the investments will generate the cash needed to sustain expectations.
The company expects revenue of about US$9.6bil for the quarter, plus or minus US$300mil, compared with analysts’ average estimate of US$9.15bil, according to data compiled by LSEG.
The company’s shares were down about 3% in choppy extended trading.
Its shares have more than doubled in value this year, with AMD’s stock gains outpacing those of market leader Nvidia, even as the larger rival’s market valuation scaled the US$5 trillion mark.
AMD’s shares fell in extended trading because short-term traders could be taking profit, said Michael Schulman, chief investment officer at Running Point Capital.
“Investors are concerned about the overall economy and chip stock valuations that may take time to grow into,” he said.
AMD reported third-quarter sales of US$9.25bil, compared with analysts’ average estimate of US$8.74bil.
Fears of an AI bubble have lately rippled through Wall Street and AMD’s results were keenly anticipated.
In AMD’s key data centre segment, which houses its AI chips, revenue in the September quarter rose 22% to US$4.3bil, beating estimates of US$4.09bil.
In a conference call after AMD released its results, executives said it had received licences to sell modified versions of its MI300 series of AI chips in China but has not begun sales.
Nvidia has also received licences to sell versions of its advanced AI chips in China.
Tech giants have all consistently committed to investing heavily in AI hardware, with a large portion of this spending funneled to chips, benefitting suppliers like AMD.
AMD customer Microsoft reported a record capital expenditure of nearly US$35bil for its fiscal first quarter last month, with roughly half of this spent primarily on chips.
Alongside major Big Tech spending on AI chips, the intense focus on expanding data centre footprints has also increased demand for server central processing units, a market where AMD has consistently been gaining share against Intel. — Reuters
