The Six Five team discusses AMD Q4 FY2023 earnings.
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Transcript:
Patrick Moorhead: AMD, man. So did they beat this beat, beat stock goes down?
Daniel Newman: They were on the same path as everyone else. I think they were in line right on earnings per share. But Pat, I mean that stock was up 20% in a month. It was on a 240% annual growth rate.
Patrick Moorhead: I mean, they’re up. They’re up 15 bucks since earnings.
Daniel Newman: Yeah. So the $3.5 Billion number, which I think where that comes from is largely from one really great customer, which we’ve already talked about today. We don’t know that for a fact, by the way. It’s just something I believe to be true. But anyways, earnings in line. Revenues up. They are the unencumbered number two right now for AI data center chips. And I’m working on an interesting bull case thesis for Intel. I’m going to publish a MarketWatch. Now, again, I always say it’s interesting because it would also be very easy to do a bear case for Intel. But having said that, AMD has a very strong bull case right now.
Patrick Moorhead: Bear cases on Intel are boring, man. I think you and I were the only two analysts that gave the company even a remote shot, or maybe it was just me, I forget.
Daniel Newman: I’m writing the bull case right now. There’s some things I’m actually very positive about. I just think, again, there’s kind of the being right and being early. And sometimes you can be wrong because you’re early, and eventually you become right. And then you and I just have to wait to become right, because we were too early when we were right. I think that there’s going to be competition. Pat, I saw a very interesting chart that went around this week, and this is relevant to AMD. It was showing GPU market and I think 98% of revenue right now is going to NVIDIA, 98%. It’s a little over, actually.
Patrick Moorhead: By the way, I don’t think that’s global, but it’s definitely the West.
Daniel Newman: Yeah, yeah, yeah. Well, I think to your point, there’s Huawei and others that have lower end.
Patrick Moorhead: I can’t wait for Futurum Intelligence to start cranking out this stuff.
Daniel Newman: Yeah, we had a chip set data that’s coming sometime later in the first half of the year.
Patrick Moorhead: Can’t wait, man.
Daniel Newman: It’s going to be a first pass. And the thing about intelligence is it is as much art as science. It is not perfect. Any numbers you see, you’ve got to take them with a little bit of a grain of salt. The only numbers you can know to be true is most of what gets filed in these earnings reports tends to be right, but the way they file doesn’t always give you exact parts, pieces and volume. So you’re still working backwards to try to figure this stuff out.
But having said that, the company did really well, Pat. I mean, look, the data center and the MI300 series, I think you saw a forecast in December of about 2 billion of expected. I think we came out what, at three and a half. She came out at three and a half in the earnings report. Am I right on that? I’m just trying to remember. And Lisa also was very generous by the way, Dr. Lisa Su, spent an hour with us analysts yesterday allowing us to basically do rapid fire grill questions. There was at least three or four good ones in an hour.
Patrick Moorhead: I know what you mean, man. Some of the questions are so dumb. I just can’t even believe it.
Daniel Newman: It’s like when you have an analyst that should never be in front of a CEO. And by the way, that’s okay. There’s that kind of span. But it’s like, I want to ask a question about a granular subject inside of a granular business unit about a single niche product that’s…
Patrick Moorhead: When you’re with the CEO ask the CEO CEO questions. It’s as simple as that.
Daniel Newman: Well, Lisa is so impressive though that there was never one that she didn’t actually know.
Patrick Moorhead: I know. I mean, if you wanted to know the bump pitch on a product three years ago compared to this one. She’d be like, beep boop, boop beep. There it is.
Daniel Newman: Absolute rockstar. I’m just saying figure it out. So the company’s got great partner positioning with its data center chips. I mean, again, publicly, Lisa talked about Microsoft, Oracle, Meta, some great ones. And of course we know that there’s some density there as to where it’s going. Outside of that business, look, some of the embedded stuff was a little bit soft. PCs are on the rise and we’re seeing that consistently from all the chip makers now, TSMCs numbers on devices. We saw it in Intel’s numbers. We’re seeing it in AMD’s numbers. By the way, this is going to accelerate. The AI/PC trendline is going to be really good for AMD. So that looks very, very good.
But I just want to be straightforward, Pat. Talking about anything else with data center right now just doesn’t interest anyone. Actually, I was kind of reviewing the Intel one. They could have beaten in every category like 90%, but that data center number just absolutely ruined it for them. And so right now, the reason AMD is getting that really good bump post after the kind of initial selling was they almost doubled their forecast in a month, Pat. I mean, their GPU forecast went from 2 billion to 3.5 billion in a month. As these big customers pick up, I think people are just drawing lines on charts. Charting’s all BS anyways, like most. So these spreadsheets and charts.
And here’s the other thing, I put this out, Pat, and I publicly said this, and I think you would agree with me. Lisa’s conservative. So what I’m saying is if she’s saying 3.5, you can be absolutely sure that she knows she’s got that in the bag. She’s not the kind of person that’s going to say 3.5 and is stretching. She’s very conservative and I admire that about her. And by the way, AMD trades at a ridiculous multiple.
Patrick Moorhead: Dan, do you remember what I called prior AMD earnings of what that number would be back on the pod?
Daniel Newman: Four?
Patrick Moorhead: I said five.
Daniel Newman: Okay. But to some extent, you might still believe it’s five. She’s saying 3.5.
Patrick Moorhead: And the question, very public question I asked her, is it demand or is it COAS or waiver?
Daniel Newman: Yeah. It’s a good question.
Patrick Moorhead: And I appreciate that. And she came back very clearly that she needs to see a little bit more before she can make that call. But you heard it here. I said it was going to be five prior. It’s going to be five, I’m pretty sure about that. I don’t know why. But actually, I do know why. I mean, look at all of the product that NVIDIA is shipping and look at all the product that NVIDIA can’t ship. There’s so much demand out there, and the software ecosystem is in place for CSPs. It just is, right? You go Python, sorry, PyTorch, you’re in. And to AMD’s credit, they put a ton of investment in that. And here we are.
Let me do some comparisons too for your Intel piece. So Intel came in on data center, was up 38%. Intel DC AI was down 10%. So we got a 48% swing there. I know those are just me adding percentages together, but it’s remarkable, right? On the PC, AMD was up 62%. Intel was up 33%. So yeah, it’s pretty clear that AMD grew share at least on a revenue basis in both of those areas. But I think even more important are some things that came up on the call were very clear. They said we gained share, we gained server share in the data center just because on a percentage basis, of course, they gained share on accelerators.
And a couple of other things that came out is that the overall market for CSPs, they did a ton of business in North America, but the market was off in rest of world. I just thought that was what was interesting. For the first time AMD talked about Epyc customers doing inferencing on models like Llama 7B. That’s a seven billion parameter model they’re doing on Epyc. Intel has been talking about this forever. We saw Ampere make a play on this. But this is the reality, and nobody likes to talk about it, but I think AMD and Intel need to start measuring the size of this and say, now it’s harder because general purpose. That’s why it’s harder, because it can do so many different things.
Probably the final thing is on market share on the guide, they did say that they expect to gain market share in Q1. So Q1 year over year, a double-digit increase and we’ll gain share. That’s pretty hefty to make a share call in the beginning of month two there. So AMD, good earnings. AMD was the only company that had decent earnings. By the way, the guide was off and their stock is up if you look across everybody that we’re talking about today.
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.
