Advanced Micro Devices Inc Q4 2024 Earnings Call Transcript

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

Question: Aaron Rakers - Wells Fargo - Analyst : Yes. Thanks for taking the question. I guess I'll just ask it right out of the gate is, as we think about the GPU business, and I appreciate you talked about delivering north of $5 billion of revenue, which is extremely impressive in 2024. I'm curious if you -- how we should think about framing the GPU, the instinct business, as we think about 2025? And any kind of color you can provide us as far as kind of the progression of revenue, the pace of revenue first half versus second half as we think about some of the product cycle dynamics. Thank you.

Question: Aaron Rakers - Wells Fargo - Analyst : Yes. Thank you very much. And as a quick follow-up, just thinking about the guidance overall relative to that down 7% sequential I know you mentioned seasonality across the business segments. Are you assuming that you are down sequentially in data center in total in 1Q? And how do I frame that relative to seasonality? Thank you.

Question: Timothy Arcuri - UBS - Analyst : Thanks a lot. I wanted to ask about the server CPU business. Jean, I think you have said in the past that core count is going to grow mid-to-high teens. And as long as your competitor is not super aggressive on pricing that your business should grow roughly that much as well. Are you expecting or are you already seeing them become a little more aggressive on pricing as they attempt to shore up their share. It sounds like they're getting a bit more aggressive on pricing. So wondering if you still think that the server CPU business can grow in line with that core

Question: Timothy Arcuri - UBS - Analyst : Thanks a lot. And then, Jean can you just give us a sense of where data center GPU came in for December? I'm thinking it's probably in the $2 billion range. And then is it assumed to be down, flat or up, would you be willing to give a number for March? Thanks.

Question: Vivek Arya - Bank of America Securities - Analyst : Thanks for taking my question. Lisa, a few questions on the data center GPU business. I think last year, AMD was very explicit about setting and beating or meeting expectations. This year, you have not set a specific forecast, and I'm curious what has changed. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 04, 2025 / 10:00PM, AMD.OQ - Q4 2024 Advanced Micro Devices Inc Earnings Call And then if I go back to your Analyst Day in December, I think at that time, you are sort of long-term 60% CAGR. Is it fair to assume that you can grow at that for '25, right, versus the $5 billion plus that you did last year. So just contrast the two years and then whether AMD can grow at that 60% trendline.

Question: Vivek Arya - Bank of America Securities - Analyst : Thank you, Lisa. And for my follow-up, I would love your perspective on the news from DeepSeek recently, right? And there are kind of two parts to that. One is once you heard the news, do you think that should make us more confident or more conservative about the semiconductor opportunity going forward? Like is there something so disruptive in what they have done, that reduces the overall market opportunity. And then within that, have your views about GPU versus ASIC how that share develops over the next few years? Have those evolved in any way at all? Thank you.

Question: Joshua Buchalter - TD Cowen - Analyst : Hi, guys. Thanks for taking my question. Obviously, it was good to see MI355X pulled into midyear. But I wanted to clarify, you said first half '25 data center GPU likely consistent with second half '24, and I was wondering if you could speak to whether or not the shape of the first half changed over the last few months and is potentially related to this pulled in time line, it could be a potential air pocket ahead of that launch? Or this was sort of consistent with how you saw things playing out as MI350 and MI325X ramps more fully? Thank you.

Question: Joshua Buchalter - TD Cowen - Analyst : Thank you. And believe it or not, I could ask a question on client. Obviously, the growth number in the fourth quarter, I mean, it was certainly higher than our model. Could you clarify the drivers of the strength across desktop, notebook and enterprise? And how we should think about 1Q, and in particular, to put it bluntly, I mean are you worried at all about inventory buildup, given how much your client revenue has outperformed the broader PC market in the second half of the year? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 04, 2025 / 10:00PM, AMD.OQ - Q4 2024 Advanced Micro Devices Inc Earnings Call

Question: Harlan Sur - JP Morgan - Analyst : Hi, good afternoon. Thanks for taking my question. For the fourth quarter, did your overall server CPU business grow double digits sequentially. And as a follow-on to that, I think Q4 was the sixth consecutive quarter of double-digit year-over-year increases for your on-prem service solutions. On a sequential basis, I know you guys did start to see recovery in enterprise in the second quarter of last year, I think it was strongly up sequentially in the third quarter, a pretty broad base. Did enterprise service grow sequentially in Q4? And Lisa how do you see the share prospects in this segment as you step into 2025?

Question: Harlan Sur - JP Morgan - Analyst : I appreciate that. Networking is a very critical part of the AI infrastructure becoming even more important. There seems to be this misconception that AMD is behind the curve here, you you're keeping pace kind of leveraging the incumbent Ethernet technology, strong installed ecosystem. You guys are spearheading the UltraNET Ethernet Consortium. You've got your Infinity Fabric technology for scale-up connectivity does you continue to drive customer adoption of your overall AI platforms. What's the feedback been like on your AI networking architectures? And any networking-related innovations the team is going to be bringing to the market this year?

Question: Blayne Curtis - Jefferies - Analyst : Hi, thanks for taking my question. Lisa, I just want to follow up the data center GPU business, obviously, very strongly year-over-year, but it seems for your commentary kind of the sequential growth kind of slows for the next kind of three quarters. So I just want to understand the why. Obviously, you have some new products coming. So maybe it's just the shift to the new products. I also want to just ping your brain on in terms of when you look at the ASIC story lines, there tends to be kind of a shift to focus on training versus inference. So just your perspective, I know a lot of your workloads initially were inference. Are you seeing any shift in terms of the demand from your customers between training inference as well?

Question: Blayne Curtis - Jefferies - Analyst : Thank you.

Question: Stacy Rasgon - Bernstein - Analyst : Hi, guys. Thanks for taking my questions. I want to ask this a little more explicitly. So you said your server business was up strong double digits sequentially in Q4. My math suggests that could have even meant that the GPU business was down sequentially. And given your guidance for I guess, flattish GPUs in the first half of '25 versus second half of '24. Again, does the math not suggest that you'd be down sequentially both in Q1 and in Q2 to feel like -- Am I doing something wrong with my math? Or like what am I missing here?

Question: Stacy Rasgon - Bernstein - Analyst : Got it. Thanks. And I guess for my follow-up, maybe to follow on there, do you think your exit rate on GPUs in '25 is higher than your exit rate in '24. Are you willing to commit to that?

Question: Toshiya Hari - Goldman Sachs - Analyst : Hi, thank you so much for squeezing me in. Lisa, I had a question on the server CPU business. I'm curious how you're thinking about the market this year? And if you can delineate between cloud and enterprise, that would be really helpful. And then kind of part B to that question. In your prepared remarks, you talked about you all having more than 50% share across the major hyperscalers. How would you characterize the competitive intensity at those customers vis-a-vis some of the internal custom silicon that's expected to ramp over the coming quarters and years?

Question: Toshiya Hari - Goldman Sachs - Analyst : [Competitive custom silicon].

Question: Toshiya Hari - Goldman Sachs - Analyst : That's great. And then as a quick follow-up, maybe one for Jean. So you're guiding gross margin to 54% in the first quarter. I'm curious what some of the major puts and takes are and those are the things that we should be cognizant of going into Q2 and more importantly, the second half. Given your data center commentary skewed more to the second half, I would expect margins to improve in the second half. But yes, if you can kind of run through the pluses and minuses, that would be really helpful. Thank you.