Release Date: May 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Advanced Micro Devices Inc (AMD, Financial) reported a 36% year-over-year increase in first-quarter revenue, reaching $7.4 billion, driven by strong growth in data center and client segments.
• The company achieved a 55% increase in net income, supported by a higher percentage of data center product sales and a richer Ryzen processor mix.
• Data center segment revenue grew by 57% year over year, with significant contributions from EPYC CPU and Instinct AI accelerator sales.
• AMD's client revenue increased by 68% year over year, marking the fifth consecutive quarter of revenue share gains, driven by high-end Ryzen processors.
• The company expanded its gross margin for the fifth straight quarter, reaching 54%, up 140 basis points from the previous year.

Negative Points

• Gaming revenue decreased by 30% year over year, primarily due to lower semi-custom sales despite higher Radeon Graphics sales.
• Embedded segment revenue declined by 3% year over year, with a gradual recovery expected in the second half of 2025.
• The new export license requirement for MI308 shipments to China is expected to result in a $1.5 billion revenue reduction for the full year 2025.
• AMD's second-quarter guidance includes an estimated $700 million revenue reduction due to the new export license requirement, impacting data center segment revenue.
• Operating expenses increased by 28% year over year, as AMD continues to invest in go-to-market activities and R&D.

Q & A Highlights

Q: Congrats on the results. Can you expand on the drivers of upside in both footprint and the guide, particularly for the Client segment? A: Lisa Su, CEO: We saw strength across several businesses, notably in the client business with strong desktop performance and a successful Radeon launch in gaming. The client segment's growth was driven by a stronger mix and higher ASPs, particularly in the desktop channel. For Q2, despite a $700 million headwind from new export controls on MI308, we expect continued strength in Client and Gaming, with above-seasonal performance in desktop and commercial ramps.

Q: How did the ex-China X308 Instinct family perform in the quarter, and what are your expectations for the first half ahead of the MI350 ramp? A: Lisa Su, CEO: The Data Center GPU performed slightly better than expected in Q1. We are excited about the MI350 launch, which is on track for midyear. Customer interest is high, and we expect a fast ramp due to system similarities with MI300. We anticipate strong growth in AI infrastructure investments, despite uncertainties like tariffs.

Q: Can you clarify the growth expectations for the Data Center GPU business, considering the China export headwinds? A: Jean Hu, CFO: The Data Center GPU business performed well in Q1, and we expect strong double-digit growth year over year. The $1.5 billion impact from export controls will mostly affect Q2 and Q3, but we anticipate a significant ramp in the second half with the MI355 launch.

Q: How is AMD addressing the challenges of rack-scale solutions with the upcoming MI400 series? A: Lisa Su, CEO: We are actively working with customers and leveraging our recent acquisition of ZT Systems to address rack-scale architecture challenges. The MI400 series has received positive feedback, and we are planning solutions with our design teams and customers to ensure successful deployments.

Q: What are AMD's strategies for competing with custom silicon and ASICs in the AI space? A: Lisa Su, CEO: We see ASICs and GPUs as complementary. GPUs have a larger role due to the changing models and competitive TCO. We believe in providing choice and expanding inferencing capabilities, and we are confident in our competitiveness in both inferencing and training solutions.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.