Advanced Micro Devices (AMD) reported strong earnings for the fourth quarter, exceeding Wall Street’s expectations for profit and revenue. However, the chipmaker’s shares fell sharply in after-hours trading due to lower-than-expected data center sales and guidance for the current quarter.
GAAP Quarterly Financial Results (via AMD):
| Q4 2024 | Q4 2023 | Y/Y | Q3 2024 | Q/Q | |
| Revenue ($M) | $7,658 | $6,168 | Up 24% | $6,819 | Up 12% |
| Gross profit ($M) | $3,882 | $2,911 | Up 33% | $3,419 | Up 14% |
| Gross margin | 51% | 47% | Up 4 ppts | 50% | Up 1% |
| Operating expenses ($M) | $3,022 | $2,575 | Up 17% | $2,709 | Up 12% |
| Operating income ($M) | $871 | $342 | Up 155% | $724 | Up 20% |
| Operating margin | 11% | 6% | Up 5 ppts | 11% | Flat |
| Net income ($M) | $482 | $667 | Down 28% | $771 | Down 37% |
| Diluted earnings per share | $0.29 | $0.41 | Down 29% | $0.47 | Down 38% |
Non-GAAP(*) Quarterly Financial Results (via AMD):
| Q4 2024 | Q4 2023 | Y/Y | Q3 2024 | Q/Q | |
| Revenue ($M) | $7,658 | $6,168 | Up 24% | $6,819 | Up 12% |
| Gross profit ($M) | $4,140 | $3,133 | Up 32% | $3,657 | Up 13% |
| Gross margin | 54% | 51% | Up 3 ppts | 54% | Flat |
| Operating expenses ($M) | $2,125 | $1,727 | Up 23% | $1,956 | Up 9% |
| Operating income ($M) | $2,026 | $1,412 | Up 43% | $1,715 | Up 18% |
| Operating margin | 26% | 23% | Up 3 ppts | 25% | Up 1 ppt |
| Net income ($M) | $1,777 | $1,249 | Up 42% | $1,504 | Up 18% |
| Diluted earnings per share | $1.09 | $0.77 | Up 42% | $0.92 | Up 18% |
Annual financial results (via AMD):
| GAAP | Non-GAAP(*) | |||||
| 2024 | 2023 | Y/Y | 2024 | 2023 | Y/Y | |
| Revenue ($M) | $25,785 | $22,680 | Up 14% | $25,785 | $22,680 | Up 14% |
| Gross profit ($M) | $12,725 | $10,460 | Up 22% | $13,759 | $11,436 | Up 20% |
| Gross margin % | 49% | 46% | Up 3 ppts | 53% | 50% | Up 3 ppts |
| Operating expenses ($M) | $10,873 | $10,093 | Up 8% | $7,669 | $6,616 | Up 16% |
| Operating income ($M) | $1,900 | $401 | Up 374% | $6,138 | $4,854 | Up 26% |
| Operating margin % | 7% | 2% | Up 5 ppts | 24% | 21% | Up 3 ppts |
| Net income ($M) | $1,641 | $854 | Up 92% | $5,420 | $4,302 | Up 26% |
| Diluted earnings per share | $1.00 | $0.53 | Up 89% | $3.31 | $2.65 | Up 25% |
AMD reports strong Q4 earnings, but shares drop sharply
AMD Chief Executive Lisa Su announced that data center sales, a key indicator of the company’s artificial intelligence chip revenue, are expected to contract by approximately 7% on a sequential basis. Although no specific forecasts for AI chip sales were disclosed, Su projected potential sales in the “tens of billions” over the next few years.
Despite reporting an annual revenue of $25.8 billion for 2024, a 14% increase year over year, AMD faced challenges entering the competitive AI chip market dominated by Nvidia. For the fourth quarter, AMD generated $7.7 billion in revenue, a 24% year-over-year growth, with earnings of $1.09 per share, up 42% from the previous year.
The data center segment was a highlight, achieving $3.9 billion in revenue, an increase of 69% year over year, while the client segment reported $2.3 billion, up 58% year over year. Conversely, the gaming segment struggled, with revenue declining 59% to $563 million, largely due to lower semi-custom sales, and the embedded segment revenue decreased by 13% to $923 million.
Why AMD is leaving Nvidia unchallenged in laptop GPUs for 2025
In terms of cash flow, AMD generated $1.1 billion in free cash flow during the fourth quarter and held $5.1 billion in cash and cash equivalents at the end of the quarter. The company repurchased 1.8 million shares, returning $256 million to shareholders. Its gross margin stood at 54%, showing an increase of 330 basis points year over year, while the operating income reached $2 billion, representing a 26% operating margin.
Looking ahead, AMD expects first-quarter 2025 revenue to fall to approximately $7.1 billion, slightly above Wall Street’s expectations of $7 billion. However, segment weaknesses are anticipated, particularly in the gaming and embedded sectors.
AMD’s stock saw a 9% drop to about $109 in after-hours trading, continuing a trend of losing a third of its value over the past year, forcing investors to evaluate critical support and resistance levels. Key support is around $110, with further declines possible to $95 and $81 if selling pressure persists. Conversely, resistance may be found at $130 during any countertrend rallies.
In a question-and-answer session following the earnings call, Su reiterated optimism about AMD’s growth opportunities in data center and AI markets, emphasizing the potential for significant growth driven by demand for high-performance computing solutions and a robust product roadmap.
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Featured image credit: Timothy Dykes
