AMD Stock Analysis

A Semiconductor Giant at the Crossroads

Author

Portfolio Parrot
February 16, 2025

Advanced Micro Devices (NASDAQ: AMD) has capped off a transformative year with impressive financial results for both Q4 and 2024. The semiconductor giant has demonstrated robust growth across key segments, particularly in data centre and client computing, while facing challenges in its gaming division.

Record-breaking revenue and Profitability

AMD reported record annual revenue of $25.8 billion for FY2024, a 14% increase over the previous year. The company's Q4 revenue reached $7.7 billion, up 24% from Q4 2023. This strong performance exceeded both AMD's previous guidance and street expectations.

Gross margin for FY2024 improved to 49%, up from 46% in the previous year. The company's profitability metrics showed significant growth, with net income nearly doubling to $1.64 billion for the year.

Data Center Dominance

The data centre segment emerged as a powerhouse for AMD, with revenue surging 94% yearly to $12.9 billion. Strong sales of EPYC CPUs and Instinct GPUs drove this growth. In Q3 2024 alone, data centre revenue hit a record $3.5 billion, representing a staggering 122% year-over-year increase.

Client Computing Resurgence

AMD's client segment also experienced impressive growth, with a record revenue of $7.1 billion in 2024, up 52% from the previous year. This success was attributed to strong demand for Ryzen processors in desktop and mobile markets. The company reported a record OEM PC sell-through share in Q4, mainly due to the ramp-up of the Ryzen AI 300 series.

AI Acceleration

AMD generated over $5 billion in AI chip revenue in 2024, signalling its growing presence in the booming AI market. The company expects this figure to reach tens of billions in the coming years, positioning AMD as a significant player in the AI chip space.

Gaming Segment Challenges

While most segments thrived, AMD's gaming division faced significant headwinds. Gaming revenue for Q4 2024 declined 59% year over year to $563 million, with full-year revenue down 58% to $2.6 billion. This downturn was attributed to decreased console console APUs and Radeon video card sales.

Looking Ahead

Despite challenges in the gaming sector, AMD's overall performance in 2024 demonstrates its strong position in the semiconductor industry. With continued growth expected in the data centre, client computing, and AI markets, AMD is poised for further success in 2025 and beyond.

AMD CEO Dr Lisa Su stated, "Looking forward, we see significant growth opportunities across our data centre, client, and embedded businesses driven by the insatiable demand for more computing."

Citations:

Reply

or to participate.