ADVANCED MICRO DEVICES INC Q4 FY2024 earnings call

• 2024 was a transformative year for AMD, with the establishment of a multi-billion dollar data center AI franchise, launch of leadership products, and gain of server and PC market share. Annual revenue was record, net income grew 26%, and free cash flow more than doubled.
• Data center segment: Revenue was a record $3.9 billion in Q4, up 69% year-over-year. EPYC and Instinct processor adoption expanded with cloud, enterprise, and supercomputing customers. Server business had a major inflection in 2024 with share gains accelerated.
• Data center AI business: 2024 was outstanding, delivering over $5 billion of revenue. MI300X production deployments expanded, ROCm software suite made progress, MI325X entered volume production, and MI350 series showed strong potential.
• Client segment: Revenue was a record $2.3 billion in Q4, up 58% year-over-year. Gained client revenue share for four straight quarters, driven by strong demand for Ryzen processors. Announced strategic collaboration with Dell.
• Gaming segment: Revenue declined 59% year-over-year in Q4 due to decrease in semi-custom sales. Embedded segment: Revenue decreased 13% year-over-year in Q4, with mixed demand environment but continued expansion of adaptive computing portfolio.

Data center segment revenue reached a record $3.9 billion in 2024, up 69% year-over-year, contributing roughly 50% of annual revenue. Client segment revenue was a record $2.3 billion, up 58% year-over-year. Gaming segment revenue was $563 million, down 59% year-over-year. Embedded segment revenue was $923 million, down 13% year-over-year. Fourth quarter revenue was a record $7.7 billion, up 24% year-over-year, led by record quarterly data center and client segment revenue. Annual revenue grew 14% to $25.8 billion, with data center revenue nearly doubling and client segment revenue growing 52%.

• 2025 is expected to see strengthened demand across all businesses, with strong growth in data center and client businesses, and modest growth in gaming and embedded businesses. Expected strong double-digit revenue and EPS growth.
• First quarter 2025 guidance: Revenue approximately $7.1 billion, up 30% year-over-year, down 7% sequentially. Non-GAAP gross margin expected to be approximately 54%.
• Data center GPU business: MI350 series production ramp advanced to mid-year, driving strong growth in data center business, with second half expected stronger than first half.

Today's discussion contains forward-looking statements based on current beliefs, assumptions, and expectations, which involve risks and uncertainties that could cause actual results to differ materially from current expectations. Please refer to the cautionary statement in the press release for factors that could cause actual results to differ materially.

Q: Regarding the framework of the GPU business in 2025 and the quarterly distribution of revenue?

A: The data center business will grow strongly by double digits, with the second half stronger than the first half, and MI350 will be a catalyst for the data center GPU business.

Q: The first quarter guidance is a 7% sequential decline, will data center decline sequentially?

A: The data center is expected to decline close to the overall average sequentially, client and embedded businesses decline more, and gaming business declines less.

Q: Will competitors be more aggressive in pricing for server CPU business and can server CPU business maintain growth?

A: AMD has the best product portfolio, provides the best TCO, and is confident to continue driving growth in the server CPU business.

Q: The situation of data center GPU in December 2024 and expectations for March 2025?

A: The data center business performance in Q4 was in line with expectations, and the first half of 2025 data center segment performance will be consistent with the second half of 2024.

Q: The reason why the data center GPU business did not set specific forecasts in 2025 and the long-term growth trend?

A: The business has reached a scale, 2025 will provide qualitative color, and is bullish on the long-term with a data center accelerator TAM of over $500 billion.

Q: The impact of MI350X advancing to mid-year on the first half data center GPU, and the drivers of client business growth and concerns in the first quarter?

A: MI350X advancing brings more content to the first half data center GPU, client business is strong due to new product launches, and there is no major inventory backlog concern.

Q: Whether server CPU business grew by double digits sequentially in Q4, and whether enterprise services grew sequentially in Q4 and share prospects in 2025?

A: Server business grew by double digits sequentially in Q4, enterprise services have strong traction, and server business prospects are strong in 2025.

Q: The importance of networking in AI infrastructure and AMD's progress?

A: Networking is an important part of AI solutions, AMD has investments in networking, and is working with partners to advance, developing its own AI NIC.

Q: The reason for the slowdown in sequential growth of data center GPU business and the shift in customer demand for training and inference?

A: It is a product transition period, and customer demand for training is also increasing, with AMD advancing training solutions in software and other aspects.

Q: Whether server business grew strongly sequentially in Q4, and GPU business decline sequentially, and GPU exit rate in 2025?

A: Data center segment grew by 9% sequentially, server grew slightly higher, GPU slightly lower, and exit rate in 2025 is higher than in 2024.

Q: The situation of server market cloud and enterprise in 2025 and the competition intensity of major hyperscalers?

A: Server market has growth in cloud and enterprise in 2025, AMD maintains share by providing products suitable for different workloads, and has over 50% share in major hyperscalers.

Q: The composition of first quarter gross margin 54% and outlook for the second half?

A: Gross margin is mainly driven by revenue structure, first half gross margin is expected to be consistent with 54%, and second half data center growth drives gross margin improvement.