AMD has increased its forecast for AI chip revenue, anticipating a $500 million boost in 2024, as tight supply conditions are expected to persist into 2025, according to a Reuters report. The surge in AI chip sales is driven by rising demand for advanced computational capabilities across various sectors, including machine learning, data analytics, and autonomous systems. AMD's AI chips are particularly sought after by major cloud computing providers and are seen as strong competitors to Nvidia, which currently dominates the market.
Following the announcement, AMDโs stock surged by 7.5% in extended trading, while Nvidia shares rose by 4.7%. However, significant investments in AI technology have yet to translate into substantial returns for some tech giants. For instance, Microsoftโs shares fell by 6% on Tuesday, reflecting challenges in meeting cloud computing service targets and indicating that major tech companies may take longer to realize the benefits of their substantial AI investments.
In the second quarter, AMDโs data center segment, its largest revenue contributor, saw a remarkable 115% increase, reaching $2.8 billion and surpassing estimates of $2.79 billion, as reported by Visible Alpha. Notably, AMD's quarterly AI chip revenue exceeded $1 billion for the first time.
Overall, AMD projected third-quarter revenue of $6.7 billion, plus or minus $300 million, exceeding the analysts' average estimate of $6.61 billion, as per LSEG data, quoted by Reuters.
The company adjusted the forecast gross margin of 53.5% compared with the estimated 53.6%. Total revenue for the second quarter grew 9% to $5.8 billion, which surpasses the estimation of $5.72 billion.
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