The Six Five team discusses AMD Q3 Earnings.
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Transcript:
Daniel Newman: Let’s talk about AMD. You and I actually ran into and had a little time to sit down with CEO Lisa Su when we were at the Dell Tech Analyst Summit. The reason we’re not talking about the Dell Tech Analyst Summit, by the way, is ’cause it was all NDA.
Patrick Moorhead: Right.
Daniel Newman: So we’re not going to say anything, but let’s just say we did have the chance to spend time with Michael, with Lisa, with a bunch of others, Jeff Clark and leaders from the Dell team and encouraging to listen to them talk about AI. Let’s talk about AMD. Okay? Long and short, it was a beat on revenue, margin and EPS looked good too, but people didn’t love it. Why didn’t people love it? Because the only thing people care about when you beat is your guide. So when you beat and you guide up, they’re happy when you beat and you guide down, they’re not. It really doesn’t matter how much you beat by because it’s the, “What have you done for me lately?” Syndrome. So everybody’s wondering, now, this is a really weird kind of a tale of two guidances. I think both of you just simultaneously looked at Lisa and congratulated her on the really encouraging guide around AI, the GPU data, GPU number. What was it? It was like 2 billion on the guide of GPU for their MI series?
They were telling a very compelling story that moves revenue off potentially of Nvidia at the very least, and enables customers that want an alternative to work at the higher layers of abstraction and frameworks with AMD to be able to get workloads on their silicons pretty seamlessly. At the same time, because gaming’s pretty weak, parts of PCs are still only just coming back, there was a very near miss on guide and everybody went ballistic about it. But Pat, I want to talk about a couple of things besides just the beat raise. The company’s operating very well. So if you didn’t see their margin, I think it’s up 5%, what a tremendous growth on a year-on-year basis. An operating margin saw a significant 5% increase on year-over-year. These are good things. When companies are in tougher periods of growth. I always look to see if they are operating well?
So we’ve seen this throughout the past few quarters when companies are trying to find profit, it’s, can they also manage the budget well? Can they manage operations well? Can they manage hiring well? Can they manage production well? Can they manage their supply chain well? So there’s a lot of indication inside the business that it’s not only running for the top end, but it’s running to become a much more efficient bottom line production machine. This is a company to be excited about, Pat. This is a company that has a good opportunity to be the number two AI company. It’s made some very important acquisitions. The Xilinx acquisition, for instance, was very important. It’s also making some pretty important moves around AI. It’s making some tuck-in acquisitions, send out some very interesting partnerships. Pat, this is a company to be encouraged by. I know you’ve got a little bias here ’cause you were, of course, the strategy chief corporate development guy. I saw your street cred.
Patrick Moorhead: Don’t even go there, dude.
Daniel Newman: I saw your street cred. It popped up.
Patrick Moorhead: I don’t have any bias, dude. I’ve been gone from that place for 12 years.
Daniel Newman: Sorry.
Patrick Moorhead: I got fired from there.
Daniel Newman: Sorry, buddy. Yeah, let me be clear about that. You’re very reputed for covering this company; not a bias of like or dislike, just you’re very well known because of your experience.
Patrick Moorhead: I know I heard the word bias, so I’m reacting to that.
Daniel Newman: Yeah, no, that’s fair. I need to be called out. I should be called out for that. I mean you’re known for your role there. It was a street cred joke. It just didn’t land. Let me do that again. I saw your street cred the other day with Forte where it pointed out that you were the AMD guy, okay, back in the day.
Patrick Moorhead: Yeah.
Daniel Newman: We blow that out. Let’s blow that out. Anyway, point is that solid, solid, solid, solid guide, eh, AI matters. That’s what it is. AI matters, can they land the AI thing? That’s probably my only gripe. My biggest gripe is just like, okay, for a year now, I keep hearing when is it going to start landing?
Patrick Moorhead: Yeah. So good coverage here. I’m going to hit some of the data center highlights. So Dan, you correctly talked about the company waiting for what they could do with AI. On the call, Lisa announced that they’re going to see $2 billion of revenue in 2024 based on GPU accelerators. The MI 300 is going to be, this is per AMD, the fastest to $1 billion that any product they’ve ever done. When I think about Opteron, I think of Ryzen, I think about Epic. I think maybe I said Athlon before, but it’s shocking that this would be the fastest to billion. Quite frankly, when I talk to CSPs and even the enterprise on-prem folks, AMD is the clear number two in AI accelerators. It comes down to a GPU design versus an ASIC, and I love ASICs. They’re harder to program too. They’re more efficient than GPUs, and there are little blocks of ASICs that are inside of what people call GPUs, but it’s just easier to program.
Intel does have a data center, GPU, and I’ll admit, I’m trying to figure out why people don’t view it as a second or even a third. It appears to me that the market is getting more excited about Habana 2 than anything else. My instinct, no pun there, tells me that Intel GPU is architected more for high-performance computing GPU than it is for AI training or AI inference ’cause quite frankly, we just don’t hear a lot about it. Indicator that the market is back when you look at the PC market is back, when you look at what Intel pulled off, but the client segment was up 42%. Okay? So we saw Intel, we saw AMD, that inventory, I can confidently say has been flushed out of the ecosystem and look like it’s doing well. Not going to comment on gaming or embedded just because they’re not what people are focused on. The gaming client revenue, its largest client, I just said I wouldn’t cover it, but I am, but yeah, the revenue was down.
That’s really on the back sell in of the gaming consoles. I was cited by AMD and a couple of the other things as well. Radeon GPU is actually up, so I’ll skip Embedded. Well, I won’t skip Embedded. They were down. Intel was down and so was Lattice, so no surprise. Industrial markets impacted, data center stuff is questionable. I’ll move on. But AMD is in the game on AI PCs as well. We haven’t heard a lot of details out of it, but they claim to have 50 notebook designs with rise in AI in the market today. They announced a really cool CPU architecture that they announced with notebooks that, I don’t want to call it big little because that’s arm and I don’t want to call it, but even P Core and E Core that Intel is doing, but there’s a rise in 4 Core and a rise in 4C. The C is the small core and the rise is the big core. I’m hearing that it’s easier to program than P and E Core, but I don’t know that myself. I haven’t done the analysis and neither has Futurum Labs.
Daniel Newman: Big Pat, little Dan.
Patrick Moorhead: There we go.
Daniel Newman: Big Pat, little Dan. So that was actually some pretty good insight, and that’s something that I think our performance labs should probably tear into. We are tearing deeply into the AI PC. You can keep an eye out for some of that. That will hit early in 2024. That’s going to be a trend line we are going to be talking about a lot.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
