Advanced Micro Devices Inc at Goldman Sachs Communacopia & Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : Thanks for being here. Thank you. Forrest, maybe I want to start very big picture and talk about AI as a broad topic. In contrast, to many of the speakers here at the conference who were coming at AI from the perspective of applications, you're coming up from a perspective of infrastructure. What's your high-level vision for where AI is going into technology? Why does the world need it? How useful do you think it's going to be? And do you really think the reality is going to live up to the level of investment we're seeing today? Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit Well, I think the story is still in the very early innings, but the indications are super positive. AMD has been honored to be in the discussion with many of the leaders in AI model development for quite a few years. And so we've had a bit of a good perspective to see the development of the technology and the application in a very early sense. And so we have -- we've seen it and we've used it ourselves for both business process as well as engineering development. I would say our assessment is it's still in its infancy, but super positive. I mean we're seeing -- on the software side, we're seeing some pretty substantial improvements in productivity as well as time to develop code for both software as well as verification tasks, and increasingly on the hardware design side, we're using it for chip development as well. So we're seeing all of the right early indications to say, look, this is going to develop or deliver, sorry, real business value. And I think that's the fundamental question. If it does, and we feel confident that it will, this is going to be a hugely transformative technology.

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : How do you think about some of the potential bottlenecks for AI deployment? Do you think raw computing power, networking power is still kind of the limiting the pace of AI software deployments and if so, like which is the more limiting factor on computer networking? Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit I think that one of the most interesting challenges from a computer architecture point of view right now is AI is, by its nature, a very distributed problem, distributed in terms of inside of the GPU and increasingly distributed across many GPUs and very large systems, particularly when we get to genetic cases, deploying AI systems means really deploying a number of different workloads, a number of different models supported by other applications across a very large network computer. And so that is a -- it's an interesting computer science problem. Certainly networking and communicating efficiently and effectively across these resources is perhaps an increasingly large part of this because slight inefficiencies in distributing the problem in networking in a coalescing results can make major impacts on the effectiveness and the efficiency of the deployment. So we do think the importance of networking, the importance of distributed systems from a software perspective as well are going to be dominant factors in performance of the systems going forward.

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : Interesting. And so if you look back and reflect over the past, biggest lessons you had over the last 12 to 18 months, how has it set up your AV for success over the next 2 to 3 years, let's say? And what are the most underappreciated points of the AMD's progress in your opinion? Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit Well, I think, again, we've tried to take a very systematic and thoughtful approach to the problem, again, gradually building up our capabilities and making sure that we are delivering value at each step along the way. So again, first getting good at inference and then building up our capability to allow customers to begin training with us and then, again, all culminating with bringing it all together in the MI450 generation. I think one of the reasons that we did that is we also acknowledge that -- I mean, quite candidly, NVIDIA is a fantastic company. They've done a fantastic job, and they were well ahead. And so we had to catch up. And we also knew that in that time of catching up, the season over the last couple of years or the last three or four years, has been the most important thing is for the big model companies to get to train the next -- each one of them to train their next frontier model to get the next level of capability, the fastest. And so that's driven most of the industry for the past few years. And I think that's, again, driven the NVIDIA success is they had the most mature ecosystem, and they were -- they had the fastest time to train promise. We decided -- we've -- with this multigenerational road map, put the objective in place of, okay, we are -- when we get to 450, we're going to be there at the same time as when Vera Rubin was intended to be there, and we're going to be there with that part that's fully performing, the software stack that's fully there, at least for the 80% of the market that's constituted by the top 20% or so customers. And so we've focused on getting there in the 450 so that for training, there's no excuses and then for -- or there's no impediment. There's no hesitation of, hey, if I'm training, I'll be behind in this generation if I go with AMD. And that's been the learning for us, and that's been the realization. 300, 325, 355 good for inference, a little bit behind in terms of time to introduction for training. And so that's been the thing that I think has slowed us down on the training progression. We recognize that fairly early.

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : Fair enough. Now you previously shared his company 2028 AI accelerated TAM $500 billion. Help us draw a line from where we are today to that future point in time from a market standpoint? Is that a sort of a straight line? Is this thing that accelerates over time? How do you think about how the market TAM evolves? And is there anything that really needs to happen in terms of technology monetization or anything else for that to happen? And I mean, is that number even not too low? Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit Well, I think our lead customers continue, and everyone sees this in the hyperscalers capital plans as well. They continue to be extremely bullish on the long-term prospects of AI. And when we first articulated that $500 billion TAM number well over a year ago, I think we got a lot of right of draws and questions about it. I think it's much less question today. And again, it's because people are seeing the early results. Now in the end, if business value does not get realized by end customers from all of this technology, then this growth rate is going to slow down. But we see enough evidence that business value is there that we're pretty optimistic that this is going to continue to grow at a pretty rapid pace. And the pace right now, quite candidly is modulated more by data center and power availability than anything else. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / 9:25PM, AMD.OQ - Advanced Micro Devices Inc at Goldman Sachs Communacopia & Technology Conference

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : Interesting. So if you think about the -- you mentioned a couple of them, the biggest challenges to kind of attaining that revenue profile that you desire in 2026. What are the risks or the challenges you see? I mean, is it still things like software stack? Do you feel like it's customer enablement. And do you feel like these things that you mentioned whether that be full rash solutions or cooling are now relatively de minimis risk from a technology standpoint. Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit Well, I think they're all -- I mean, we're paying very close attention to a long list of items. I think we've got a very rigorous -- again, a very rigorous derisking plan in place development and validation plan in place. I mean, obviously, yeah, I mean, it is a very complex rack-level solution, there's mechanical, potential mechanical issues, potential signal integrity issues, potential thermal issues. And so we're trying to pay attention to all of those. And I think we've got them all pretty well in hand. As well on the software side, particularly for the lead customers, the 20-year or so customers that really matter that are going to drive the overwhelming proportion of the capital investment. We've been working very closely with them to make sure that the software that they require is going to be there in time. Now maybe not the full long tail. We're -- I mean NVIDIA has done a great job investing in AI for many, many years, and they've got support for a very long tail of customers. We're not going to be able to quickly match that, but we're not trying. We're trying to make sure that we are fully there at MI450 for the customers that really matter for the 80%, 85% of the market.

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : And then so would you say that's kind of giving -- is that software piece is kind of giving you there more to like the wide aperture of customers not getting to the very longest deal, but kind of certainly widening beyond the initial set of target customers you add last generation. Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit Yeah. No, absolutely. And so we've been, again, fairly systematic about building out the support for the different frameworks, the libraries, the various open source projects that are relevant, again, to these customers. And something like JAKs, for example, JAK support is very important to a number of these customers. Our JAKs support was relatively mature. So a year ago, it's come a long way. And again, we're trying to be systematic about being fully complete for this targeted set of customers on the software side.

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : And then from a -- philosophically from a gross margin perspective, how do you think about pricing to the value you're providing as you continue to sort of up the game on each new generation of technology. In other words, if the raw performance of MI355 is kind of on par with Blackwell and 400 series is going to be on par with Rubin, should we expect more pricing power and improving gross margins within sort of the data center GPU space for AMD going forward? Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit Well, I think two things. It's an interesting market in that it's a -- again, it's concentrated in a few large deals. I guess NVIDIA if I recall correctly, their most recent announcement is 50% of their revenues is four customers. It's very, very highly concentrated market, which tends to be extremely large customers, large deals tend to put a great deal of pressure over time on margin. And then likewise, as there becomes a real competitive environment, that also will put some pressure. However, again, what really depends -- what really drives what you can charge is the value that you're driving for the end customer. And so our focus just as it has been on the CPU side, where, candidly, our ASPs are quite a bit higher than our competitor on the CPU side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / 9:25PM, AMD.OQ - Advanced Micro Devices Inc at Goldman Sachs Communacopia & Technology Conference We charge more for our CPUs than our competitor does. And the reason is because we're giving superior value, we're giving performance, we're giving reliability. We're giving things that allow us to charge for that technology and for the customers to feel good about the price that they're paying. We're trying to take the same perspective into the instinct side into the GPU side and really try to be cognizant of how do we, at each generation offer a superior TCO, it large to our customers, and they're measuring that, of course, at the cluster level. It's not at the part level at the cluster level. So we're trying to be very cognizant of designing the product for high performance and for superior TCO. And I think as long as we're doing that, we will get appropriate return from the investment.

Question: James Schneider - Goldman Sachs & Company, Inc - Analyst : Yeah. And then lastly, to the point you just raised, where do you think your market share stands today in both hyperscale or cloud as well as enterprise. And ultimately, do you think you can keep outgrowing the market and sort of see some level of plateau in your market share in either or both of those markets? Forrest Norrod - Advanced Micro Devices Inc - Executive Vice President, General Manager - Data Center Solutions Business Unit Yeah, I think in the extreme, of course, you can't get above 100%. So there is a plateau, there somewhere, but all kidding aside. Look, we obviously are more represented in the hyperscale side. We've got a very good share in North America hyperscale. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 08, 2025 / 9:25PM, AMD.OQ - Advanced Micro Devices Inc at Goldman Sachs Communacopia & Technology Conference We're growing rapidly in Asia as well. We do -- that is an area where we do see the TAM expanding quite a bit right now because of AI. So we actually see TAM expansion within the cloud segment, that's very strong, much stronger than we expected just even a few quarters ago. And then on the enterprise side, we've probably got about a 20-point -- there's probably about a 20-point share premium on the cloud side versus enterprise. But both of them are growing very rapidly, and the enterprise is probably share is probably growing a little bit more rapidly. I think that as enterprises get more and more comfortable and more and more aware of AMD, we're seeing and perhaps more aware of the overall environment, that our competitor perhaps is in, they're getting more comfortable with giving AMD a shot. And when we get a shot, we generally win.