AMD Earnings: Focus on AI Chip Sales and PC Market Performance

• AMD (AMD) will report its first-quarter earnings after the bell on Tuesday, with investors and analysts looking at two key metrics: AI chip sales and PC market performance.
• The company released its MI300 line of AI accelerators in December 2023 and began shipping units shortly thereafter. How well those chips are selling could have a large impact on AMD's shares following the earnings announcement.
• Wall Street expects earnings per share (EPS) of $0.61 on revenue of $5.45 billion. That would mark a slight increase from the same quarter last year when AMD reported EPS of $0.60 on revenue of $5.35 billion.

AI Chip Sales

• AMD's MI300 chips are meant to go head-to-head with Nvidia's (NVDA) best-selling H100 line of accelerators.
• The company previously said that its MI300X beats out Nvidia's chips, a claim Nvidia rejected. Intel is also chasing Nvidia's H100 platform with its Gaudi 3 accelerators.
• Nvidia, however, announced its follow-up to the H100, the Blackwell platform, during its GTC conference in March. This platform should offer better performance than its predecessor.

The AI arms race isn't slowing anytime soon, either. Microsoft (MSFT), Google (GOOG, GOOGL), and Meta (META) each announced that they're pouring money into AI data center capabilities to build out and support their various software offerings. But whether AMD can steal significant market share away from market leader Nvidia remains to be seen. According to UBS Global Research analyst Timothy Arcuri, MI300X sales should bring in billions this year. "We still very much see $5 billion to $6 billion as still conservative for MI300 revenue this year and we also see guidance being fine," he wrote in an investor note ahead of earnings. For the quarter, Wall Street is anticipating Data Center revenue of $2.31 billion, which would equate to a year-over-year increase of 78% versus the same period last year.

PC Market Performance

• Outside of AI sales, Wall Street will be looking at the recovery in the PC market and its impact on AMD's sales.
• According to IDC, global PC shipments grew 1.5% in the first quarter of 2024, marking the first quarter of growth after two years of declines.
• Intel already reported a 31% year-over-year bump in Client Group revenue, the company's PC chip segment, in its latest quarter. That should bode well for AMD.

Both companies are pushing their own AI PCs, or laptops and desktops that can run generative AI apps locally rather than via the web. Analysts are calling for AMD Client revenue, the segment that includes PC chip sales, to jump 74% year over year to $1.29 billion in the quarter. But Intel and AMD aren't the only companies pushing for a slice of the AI PC market. Qualcomm (QCOM) is angling for its own cut with its new Snapdragon X Elite and Snapdragon X Plus chips for laptops. Despite healthy growth projections for its Data Center and Client segments, Wall Street is expecting the company's Gaming and Embedded divisions to tumble 45% and 40%, respectively.