Advanced Micro Devices Inc at Morgan Stanley Technology, Media & Telecom Conference Transcript

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

Question: Joseph Moore - Morgan Stanley - Analyst : <_ALACRA_META_ABSTRACT>Anyway, so welcome you guys. Thank you so much for joining us. I think we've got to start on AI. I think it's a rule. But you guys had a great year one. You did over $5 billion of revenue for a product from a standing start that people got first silicon and used it $5 billion in a year, tremendous. People want more always. But like a very good year one. Can you talk about what was required to do that? And how much visibility that gives you? It doesn't seem like people buy a point product, they're buying a road map. So obviously, that $5 billion speaks to a certain amount of confidence. Can you talk about that year one experience? Jean Hu - Advanced Micro Devices Inc - Chief Financial Officer, Executive Vice President, Treasurer Yes, absolutely. First, thank you for having us. This is a great conference. And thank you for the question. 2024, it was truly a transformative year for AMD. As you mentioned that we actually ramped up MI300 really quickly, and it exceeded $5 billion. Both the MI300 and our ROCm software right now are powering some of the most complicated AI models, right, at Microsoft, at Meta, at scale. So it's a lot of progress we made, and the team executed flawlessly actually to ramp the production over MI300. At the same time, we also made tremendous progress in our overall hardware road map and the software stack. If you think about the hardware side, not only we introduced MI325, but we also put in this year, MI350. And next year, we're going to be on track for MI400. On the software side, we made a lot of progress with the ROCm to really support all different applications and the workload. We also acquired ZT Systems to build our system expertise, to build the reg level and class level designs. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 03, 2025 / 9:05PM, AMD.OQ - Advanced Micro Devices Inc at Morgan Stanley Technology, Media & Telecom Conference So overall, the progress made and our engagement with the customers also broadened quite significantly. Not only we add new customers and with existing customers the engagement has always been about market generational. It's not just about generating MI300 revenue, it's about the discussions for MI350 and MI400, how we help our customers build clusters to provide better TCOs. So the way to think about it is MI300 is the very, very beginning of our journey and each generation, if you look at our product road map, we get better and stronger, more competitive. And just like how we build our server side of the business. Over time, we want to be a strong player, gaining market share in this market. When you look at the market opportunities, we do expect to be like $0.5 trillion, 500 large market opportunities. And based on the execution we have so far and how we are very well positioned, we do believe we can have a growth trajectory to tens of billion dollars in annual revenue in this market.

Question: Joseph Moore - Morgan Stanley - Analyst : Can you talk about the role of the price of the hardware? Because I think you just mentioned it's -- you can do something cheaper purpose built. But if you're competing for that broader range of programmable workloads, if this were as easy as doing $5,000 cards, a lot of people would be successful at it. You enable -- have expensive cards. Even within your stacks, it seems like a lot of the business gravitates to the highest performing part. So can you just talk about the role of price in all of this?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. And I guess before I get to the road map, I mean, the ubiquity of AMD, you can be at several different cloud vendors. You can make investments into the software ecosystem that can benefit all of your customers can benefit a wide range, people that don't want to be locked into a single cloud vendor for their workloads, AMD is going to have that appeal. How important is that? And how does that inform the acquisitions that you're doing around software acquisitions in ZT?

Question: Joseph Moore - Morgan Stanley - Analyst : I mean the ZT in particular, seems like a lot of work, right? I mean you're buying an ODM, divesting the hardware portion, keeping the engineering resources. What is that getting you that in return for the work that you're doing there?

Question: Joseph Moore - Morgan Stanley - Analyst : So maybe we could talk about the road map a little bit, starting with MI350 this year. How game changing is that product? Are you going to get new customers, replacement customers? Or obviously, people are going to migrate to 350, but how important is it from generating new demand?

Question: Joseph Moore - Morgan Stanley - Analyst : And then with MI400, you alluded to a lot of the rack and cluster level benefits that you bring. Is the frame of reference their MI400 versus Rubin? And obviously hard to talk about future products from different companies. But just -- is this the point where you can kind of take a much bigger role in training, things like that, your confidence level in that based on what you know of your competitors' road map?

Question: Joseph Moore - Morgan Stanley - Analyst : Okay. And I do want to spend some in the other 80% of your business, but I still have to ask a couple of other questions. I guess, tens of billions that forecast that you have more than one 10, but tens of billions of revenue potential around these products. Presumably, that is something that you're saying based on conversations you're having with customers about the opportunity that you have. What has to happen for you to achieve those kinds of numbers? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 03, 2025 / 9:05PM, AMD.OQ - Advanced Micro Devices Inc at Morgan Stanley Technology, Media & Telecom Conference

Question: Joseph Moore - Morgan Stanley - Analyst : Great. And then last AI question for me. The export controls, if we do get -- we have rules that are supposed to go in place mid-May, we don't know if those will be the final say. Just how is AMD positioned to deal with potential government export controls?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. So I'd like to pivot and talk -- ask you about some of the x86 businesses starting with servers. You guys have done well in the server market in a market that's been tough, right? We've seen a lot of this AI investment has caused people to -- actually go as far as lengthen the depreciable lives of their servers. So when you guys have the highest market share with the people who are doing that, it seems like it's a headwind and yet you've grown pretty nicely. What's your visibility to that? I mean you've talked about the staleness of the data center ecosystem server-wise. When do you think we might start seeing more refresh business?

Question: Joseph Moore - Morgan Stanley - Analyst : And in the enterprise side of the server business, meaning both the enterprise OEMs, but also cloud that's servicing enterprise. You guys had a technology lead now for 6 years or 7 years. Obviously, there's still an incumbency advantage for Intel in some cases, but are you able to continue to break through that? And if Intel narrows the gap, does that make it harder? I mean how big does the lead have to be for the enterprise market to keep swinging towards AMD?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. And then shifting to client, really impressive performance there also. I think you grew 58% year-on-year last quarter with a seasonal outlook. Now your competitor called out that they thought there might be a tariff pull forward in their numbers. So how good -- how do you feel about sort of market share in that space is? Are those numbers entirely share-driven and your visibility on that continuing to improve through the year?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. And so I'll have one more segment question, and then I'll open it to the audience. Embedded. It's been a challenging period, but this is the Xilinx FPGA business. It's been a challenging period for kind of all broad-based market companies in the last year or so. Can you talk about the progress there and any visibility that you may have into growth in Embedded?

Question: Joseph Moore - Morgan Stanley - Analyst : And the gross margins in Embedded, the questions come up in the context of your competitors saying that their gross margins are significantly lower than a few years ago. It seems like there was a discipline of having two public companies that you didn't chase market that were converting to ASICs. It seems like your gross margins are still kind of at the level when you acquired Xilinx. Can you talk to that?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. Do we have any questions from the audience? One in the front? Unidentified Participant (inaudible) Joe I just want to get a sense of -- a lot of investors are looking at ASP per core. Why is that so strong to measure when customers look at ASP per core (inaudible)

Question: Joseph Moore - Morgan Stanley - Analyst : Any other questions from the audience? I guess then I'll close with like how do you think about R&D dollars? When you think about you're characterizing AI as a $500 billion opportunity. You have tens of billions of revenue potential. I know Lisa pretty well, she's not going to be happy with 5% share. She's going to drive for pretty big numbers. Your competitor is spending $16 billion. So how do you think about the need to invest more, to invest ahead of those revenue levels?

Question: Joseph Moore - Morgan Stanley - Analyst : Very helpful. Jean, Matt, thank you so much for time. I appreciate it.