AMD reports third-quarter results after the market closes on Tuesday, with its shares down nearly 30% from their all-time high. The headline numbers are expected to match guidance, so the fourth-quarter outlook for its Helios AI systems is the figure to watch. AMD remains far smaller than Nvidia in AI chips.
AMD fell nearly 11% on Friday and sold off further on Monday amid broader chip stock weakness, with no AMD-specific news. The stock is down nearly 30% from its all-time high, reached less than a month ago.
The headline results probably won't be the surprise. AMD guided for revenue of about $13 billion, plus or minus $300 million, while analysts expect $13.09 billion, which would be 41.5% higher than a year ago.
Fourth-quarter guidance in focus
The more important figure is likely to be AMD's fourth-quarter guidance, specifically how much of it comes from data center GPUs. AMD began shipping its Helios rack-scale systems, built on its MI450 chips, in September. Management said on its last call that it expects the ramp to accelerate meaningfully in the fourth quarter.
Wall Street's average estimate is about $16.3 billion in fourth-quarter revenue, and Jefferies analyst Blayne Curtis expects closer to $17 billion. A forecast at or above that higher level would suggest Helios demand is turning into revenue quickly. Customers include OpenAI, Meta Platforms, Microsoft and Anthropic.
Nvidia's data center lead
The gap with Nvidia remains wide. Nvidia generated $89 billion of data center revenue in its most recent quarter, while AMD's entire data center segment, which includes its EPYC server processors, generated $6.7 billion.
AMD does not need to close that gap, however. AI companies want a second source of computing power, and the article describes AMD as the most credible alternative. CEO Lisa Su has said each gigawatt of AI capacity represents double-digit billions in revenue.
Risks remain. AI chips carry slightly lower margins than server processors, so a fast GPU ramp could weigh on gross margin. Intel's warning about a shrinking PC market could also be a headwind for AMD's client business, which grew 23% last quarter.
Source: The Motley Fool
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