Data Center Sales Surge as AMD’s AI Chips Gain Traction
- Data Center Dominance: Nearly half of AMD’s sales now come from data center products.
- Explosive AI Chip Growth: AMD’s Instinct MI300 AI chip achieved $1 billion in quarterly sales.
- Future Focus: AMD plans to release new AI chips annually to compete with Nvidia.
AMD is undergoing a significant transformation, as evidenced by its latest earnings report. The company’s second quarter of 2024 marked a pivotal shift: nearly 50% of AMD’s sales now originate from data center products. This is a notable change from the company’s traditional focus on personal computers, gaming consoles, and embedded chips.
The most striking highlight from the earnings call was the rapid growth of AMD’s AI GPU sales. The AMD Instinct MI300 accelerator chip, which competes directly with Nvidia‘s H100 AI chip, generated over $1 billion in sales in a single quarter. This is a significant leap from the $1 billion in cumulative sales since its release in December 2023. AMD’s Epyc server CPUs also played a role in this growth, according to CEO Lisa Su.
The AI Surge
AMD’s data center business has doubled in the past year, driven by the success of the MI300 chip. This mirrors Nvidia’s strategy, which has seen immense profitability from its H100 AI chip, leading to a yearly release schedule for new AI chips. AMD appears to be following suit, with plans to release the MI325X later this year, the MI350 in 2025, and the MI400 in 2026. Su expressed confidence that the MI350 will be very competitive with Nvidia’s Blackwell chip, currently touted as the world’s most powerful AI chip.
Despite supply chain improvements, AMD anticipates that supply will remain tight through 2025. This demand underscores the broader industry trend towards AI and the critical role that advanced GPUs play in this shift.
The Nvidia Challenge
Although AMD’s data center business is growing rapidly, it remains a fraction of Nvidia’s in terms of revenue. Nvidia reported $22.6 billion in data center sales in the same quarter, dwarfing AMD’s $2.8 billion. However, AMD’s strategy of annual AI chip releases could help it gain more ground in this lucrative market.
Impact on Gaming and Personal Computing
The AI boom has implications for other sectors of AMD’s business. The development of new GPU architectures funded by AI research could lead to faster improvements in gaming GPUs and other applications. However, in 2024, the focus on AI may mean fewer new GPU releases for gamers.
Interestingly, AMD’s personal computing CPU and GPU businesses showed resilience. Ryzen CPU sales were up 49% year over year, despite a decline in gaming revenue due to flagging PlayStation and Xbox sales. The Radeon 6000 GPUs also saw increased sales year over year.
Looking ahead, AMD is preparing to ship more than 100 different platforms with its Ryzen AI 300 “Strix Point” chips. While only a few models have hit the shelves so far, including some from Asus and HP, Su confirmed that Acer and Lenovo will soon join the list.
AMD’s strategic pivot towards AI and data centers signifies a profound transformation. By focusing on annual AI chip releases and leveraging its success with the Instinct MI300, AMD aims to challenge Nvidia’s dominance in the AI space. This shift not only highlights the growing importance of AI in the tech industry but also suggests potential downstream benefits for gaming and personal computing technologies.