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AMD CEO: ‘We’re making bets five years out’
Su also stressed the importance of looking down the road in the tech sector.
“Sometimes people get caught on what’s happening today, what’s happening tomorrow, or the next quarter,” Su noted. “What I’d like to say is that you have to take a step back. As a tech company, it’s our job to make bets that are three to five years out.”
Related: Analysts reboot AMD stock price target after earnings
AMD has made a number of acquisitions, most recently signing a definitive agreement last month to acquire AI infrastructure provider ZT Systems. The acquisition, valued at $4.9 billion, is expected to enhance AMD’s non-GAAP earnings by the end of 2025.
At that time, Citi analysts said they believed the acquisition should allow AMD to better compete with Nvidia NVDA “in the data center GPU market via additional system experience and faster hyper scaler deployment times.”
Citi, which reiterated its buy rating on AMD and $210 price target, said in an Aug. 21 research note that ZT Systems customers include some of the largest cloud hyperscalers, including Microsoft’s (MSFT) Azure and Amazon’s (AMZN) AWS. It develops systems using components from Nvidia, Intel (INTC) , and AMD among others.
The firm said AMD intends to sell about 95% of ZT Systems’ manufacturing business while keeping 1,000 engineers.
Earlier this month, AMD announced that Keith Strier had joined the company as senior vice president of global AI markets.
Strier, most recently vice president of worldwide AI initiatives at AMD’s arch-rival Nvidia, will be responsible for expanding AMD’s “AI vision, driving new ecosystem capabilities and accelerating strategic AI engagements globally across public and private sectors.”
The Santa Clara-based company, which is slated to report quarterly earnings next month, is down nearly 30% from its all-time of $227.30 in March but still up roughly 40% from a year ago.
In July, AMD beat Wall Street’s second-quarter earnings expectations.
AMD plans AI conference to highlight new chips
Revenue for the quarter was above the midpoint of guidance, and profitability increased by a double-digit percentage due to higher-than-expected sales of the company’s Instinct, Ryzen, and EPYC processors.
Data-center-segment revenue more than doubled year-over-year to a record $2.8 billion, driven by the steep ramp of Instinct MI300 GPU shipments and a double-digit percentage increase in EPYC central-processing-unit sales.
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AMD has scheduled “Advancing AI 2024,” an in-person and live-streamed event for October 10.
The company said the event will showcase its next-generation Instinct accelerators and 5th Gen AMD EPYC server processors, as well as Networking and AI PC updates.
The event will also highlight the company’s growing AI solutions ecosystem. AMD executives and AI ecosystem partners, customers, and developers will join Su to discuss how “AMD products and software are reshaping the AI and high-performance computing landscape.”
Analyst updates AMD stock outlook, cites “headwind”
Ahead of the conference, Citi Research noted that August notebook shipments increased 15% month-over-month.
However, the increase was more a reflection of the weak demand recorded in July than a material strengthening of the market.
Analyst Carrie Liu forecasts that notebook demand will increase 4% quarter over quarter in the third quarter, less than the average of 5%.
“We believe the PC recovery appears weaker than expected following our conversations with Intel, Dell (DELL) , and Western Digital (WDC) last week,” said Citi analyst Christopher Danely. “We believe the inventory replenishment in PCs is over and could be a mild headwind near-term.”
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