AMD Advanced Micro Devices, Inc. · Q4 2024 Earnings Call

Today's discussion contains forward-looking statements based on our current beliefs, assumptions, and

expectations, speak only as of today, and as such, involve risks and uncertainties that could cause actual results

to differ materially from our current expectations. Please refer to the cautionary statements in our press release

for more information on factors that could cause our actual results to differ materially. With that, I will hand the

call over to Lisa. Lisa?

LISA SU: Thank you, Matt. And good afternoon to all those listening today. 2024 was a transformative year for AMD. We

successfully established our multi-billion dollar data center AI franchise, launched a broad set of leadership

products, and gained significant server and PC market share. As a result, we delivered record annual revenue,

grew net income 26% for the year, and more than doubled free cash flow from 2023.

Importantly, the data center segment contributed roughly 50% of annual revenue as Instinct and EPYC processor

adoption expanded significantly with cloud, enterprise, and supercomputing customers. Looking at our financial

results, fourth quarter revenue increased 24% year over year to a record $7.7 billion, led by record quarterly

data center and client segment revenue, both of which grew by a significant double-digit percentage.

On a full year basis, annual revenue grew 14% to 25.8 billion as data center revenue nearly doubled and client

segment revenue grew 52%, more than offsetting declines in our gaming and embedded segments. Turning to

the segments, data center segment revenue increased 69% year over year to a record 3.9 billion. 2024 marked

another major inflection point for our server business as share gains accelerated, driven by the ramp of 5th Gen

EPYC Turin and strong double-digit percentage year over year growth in 4th Gen EPYC sales.

In cloud, we exited 2024 with well over 50% share at the majority of our largest hyperscale customers.

Hyperscaler demand for EPYC CPUs was very strong, driven by expanded deployments powering both their

internal compute infrastructure and online services. Public cloud demand was also very strong, with the number

of EPYC instances increasing 27% in 2024 to more than 1,000.

AWS, Alibaba, Google, Microsoft, and Tencent launched more than 100 AMD general purpose and AI instances in

the fourth quarter alone. This includes new Azure instances powered by a custom-built EPYC processor with HBM

memory that delivers leadership HPC performance based on offering 8x higher memory bandwidth compared to

competitive offerings.

We also built significant momentum with Forbes 2,000 global businesses using EPYC in the cloud, as enterprise

customers activated more than double the number of EPYC cloud instances from the prior quarter. This capped

off a strong year of growth, as enterprise consumption of EPYC in the cloud nearly tripled from 2023.

Turning to enterprise on prem adoption, EPYC's CPU sales grew by a strong double-digit percentage year over

year as sell through increased, and we closed high-volume deployments with Akamai, Hitachi, LG, ServiceNow,

Verizon, Visa, and others. We are seeing growing enterprise pull based on the expanding number of EPYC

platforms available and our increased go-to market investments.

Exiting 2024, there are more than 450 EPYC platforms available from the leading server OEMs and ODMs,

including more than 120 Turin platforms that went into production in the fourth quarter from Cisco, Dell, HP,

Lenovo, Supermicro, and others. Looking forward, Turin is clearly the best server processor in the world, with

more than 540 performance records across a broad range of industry standard benchmarks.

At the same time, we are seeing sustained demand for both 4th and 3rd Gen EPYC processors as our consistent

roadmap execution has made AMD the dependable and safe choice. As a result, we see clear growth

opportunities in 2025 across both cloud and enterprise, based on our full portfolio of EPYC processors, optimized

for leadership performance across the entire range of data center workloads and system price points.

Turning to our data Center AI business, 2024 was an outstanding year as we accelerated our AI hardware

roadmap to deliver an annual cadence of new Instinct accelerators, expanded our ROCm software suite with

significant uplifts in inferencing and training performance, built strong customer relationships with key industry

leaders, and delivered greater than $5 billion of data center AI revenue for the year.

Looking at the fourth quarter, MI300X production deployments expanded with our largest cloud partners. Meta

exclusively used MI300X to serve their Llama 405B frontier model on meta.ai, and added Instinct GPUs to its

OCP-compliant Grand Teton platform, designed for deep learning recommendation models and large-scale AI

inferencing workloads.

Microsoft is using MI300X to power multiple GPT4-based Copilot services and launch flagship instances that scale

up to thousands of GPUs for AI training and inference and HPC workloads. IBM, DigitalOcean, Vultr, and several

other AI-focused CSPs have begun deploying AMD Instinct accelerators for new instances. IBM also announced

plans to enable MI300X on their Watsonx AI and data platform for training and deploying enterprise-ready

generative AI applications.

Instinct platforms are currently being deployed across more than a dozen CSPs globally, and we expect this

number to grow in 2025. For enterprise customers, more than 25 MI300 series platforms are in production with

the largest OEMs and ODMs. To simplify and accelerate enterprise adoption of AMD Instinct platforms, Dell began

offering MI300X as a part of their AI factory solution suite and is providing multiple ready to deploy containers via

the Dell enterprise hub on Hugging Face.

HPC adoption also grew in the quarter. AMD now powers five of the 10 fastest and 15 of the 25 most energy-

efficient systems in the world on the latest top 500 supercomputer list. Notably, the El Capitan system at

Lawrence Livermore National labs debuted as the world's fastest supercomputer, using over 44,000 MI300A APUs

to deliver more than 1.7 exaflops of compute performance.

Earlier this month, the high-performance computer center at the University of Stuttgart launched the Hunter

supercomputer that also uses MI300A. Like El Capitan, Hunter will be used for both foundational scientific

research and advanced AI projects, including training LLMs in 24 different European languages.

On the AI software front, we made significant progress across all layers of the ROCm stack in 2024. Our strategy

is to establish AMD ROCm as the industry's leading open software stack for AI, providing developers with greater

choice and accelerating the pace of industry innovation. More than 1 million models on Hugging Face now run out

of the box on AMD, and our platforms are supported in the leading frameworks, like PyTorch and Jax, serving

solutions, like VLM, and compilers, like OpenAI Triton.

We have also successfully ramped large scale production deployments with numerous customers using ROCm,

including our lead hyperscale partners. We ended the year with the release of ROCm 6.3 that included multiple

performance optimizations, including support for the latest flash attention algorithm that runs up to 3 times

faster than prior versions, and S3 Lang runtime that enabled day 0 support for state of the art models, like

DeepSeek V3.

As a result of these latest enhancements, MI300X inferencing performance has increased 2.7 times since launch.

Looking forward, we're continuing to accelerate our software investments to improve the out of the box

experience for a growing number of customers adopting Instinct to power their diverse AI workloads.

For example, in January, we began delivering bi-weekly container releases that provide more frequent

performance and feature updates in ready-to-deploy packages, and we continue adding resources dedicated to

the open source community that enable us to build, test, and launch new software enhancements at a faster

pace.

On the product front, we began volume production of MI325X in the fourth quarter. The production ramp is

progressing very well to support new customer wins. MI325 is well positioned in market, delivering significant

performance and TCO advantages compared to competitive offerings. We have also made significant progress

with a number of customers adopting AMD Instinct.

For example, we recently closed several large wins with MI300 and MI325 at Lighthouse AI customers that are

deploying Instinct at scale across both their inferencing and training production environments for the first time.

Looking ahead, our next generation MI350 series featuring our CDNA 4 architecture is looking very strong.

CDNA 4 Will deliver the biggest generational leap in AI performance in our history, with the 35x increase in AI

compute performance compared to CDNA 3. The silicon has come up really well. We were running large-scale

LLMs within 24 hours of receiving first silicon, and validation work is progressing ahead of schedule.

The customer feedback on MI350 series has been strong, driving deeper and broader customer engagements

with both existing and net-new hyperscale customers in preparation for at-scale MI350 deployments. Based on

early silicon progress and the strong customer interest in the MI350 series, we now plan to sample lead

customers this quarter, and they're on track to accelerate production shipments to mid-year.

As we look forward into our multiyear AMD Instinct roadmap, I'm excited to share that MI400 series development

is also progressing very well. The CDNA Next architecture takes another major leap, enabling powerful rack-scale

solutions that tightly integrate networking, CPU, and GPU capabilities at the silicon level to support Instinct

solutions at data center scale.

We designed CDNA Next to deliver leadership AI and HPC flops while expanding our memory capacity and

bandwidth advantages and supporting an open ecosystem of scale-up and scale-out networking products. We

are seeing strong customer interest in the MI400 series for large scale training and inference deployments, and

remain on track to launch in 2026.

Turning to our acquisition of ZT Systems, we passed key milestones in the quarter and received unconditional

regulatory approvals in multiple jurisdictions, including Japan, Singapore, and Taiwan. Cloud and OEM customer

response to the acquisition has been very positive, as ZT's Systems expertise can accelerate time to market for

future Instinct accelerator platforms.

We have also received significant interest in ZT's manufacturing business. We expect to successfully divest ZT's

industry-leading, US-based data center infrastructure production capabilities shortly after we close the

acquisition, which remains on track for the first half of the year.

Turning to our client segment, revenue increased 58% year over year to a record 2.3 billion. We gained client

revenue share for the fourth straight quarter, driven by significantly higher demand for both Ryzen desktop and

mobile processors. We had record desktop channel sellout in the fourth quarter in multiple regions, as Ryzen

dominated the best-selling CPU lists at many retailers globally, exceeding 70% share at Amazon, Newegg, Mind

Factory, and numerous others over the holiday period.

In mobile, we believe we had a record OEM PC sell-through share in the fourth quarter as Ryzen AI 300 series

notebooks ramped. In addition to growing share with our existing PC partners, we were very excited to announce

a new strategic collaboration with Dell that marks the first time they will offer a full portfolio of commercial PCs

powered by Ryzen Pro processors.

The initial wave of Ryzen-powered Dell commercial notebooks is planned to launch this spring, with the full

portfolio ramping in the second half of the year as we focus on growing commercial PC share. At CES, we

expanded our Ryzen portfolio with the launch of 22 new mobile processors that deliver leadership compute,

graphics, and AI capabilities.

Our Ryzen processor portfolio has never been stronger, with leadership compute performance across the stack.

For AI PCs, we are the only provider that offers a complete portfolio of CPUs enabling Windows Copilot plus

experiences on premium, ultrathin, commercial gaming and mainstream notebooks.

Looking into 2025, we are planning for the PC TAM to grow by a mid single-digit percentage year on year. Based

on the breadth of our leadership client CPU portfolio and strong design win momentum, we believe we can grow

client segment revenue well ahead of the market.

Now turning to our gaming segment, revenue declined 59% year over year to 563 million. Semi-custom sales

declined as expected as Microsoft and Sony focused on reducing channel inventory. Overall, this console

generation has been very strong, highlighted by cumulative unit shipments surpassing 100 million in the fourth

quarter. Looking forward, we believe channel inventories have now normalized and semi-custom sales will return

to more historical patterns in 2025.

In gaming graphics, revenue declined year over year as we accelerated channel sellout in preparation for the

launch of our Next Gen Radeon 9000 series GPUs. Our focus with this generation is to address the highest

volume portion of the enthusiast gaming market with our new RDNA 4 architecture. RDNA 4 delivers significantly

better ray tracing performance and adds support for AI-powered upscaling technology that will bring high-quality

4K gaming to mainstream players when the first Radeon 9070 series GPUs go on sale in early March.

Now turning to our embedded segment, fourth quarter revenue decreased 13% year over year to 923 million. The

demand environment remains mixed, with the overall market recovering slower than expected as strength in

aerospace and defense and test and emulation is offset by softness in the industrial and communication

markets. We continue to expanding our adaptive computing portfolio in the quarter with differentiated solutions

for key markets.

We launched our Versal RF series with industry-leading compute performance for aerospace and defense

markets, introduced our Versal premium series Gen 2 as the industry's first adaptive compute devices,

supporting CXL 3.1 and PCIe Gen 6, and began shipping our Next Gen LVO card with leadership performance for

ultra-low latency trading.

We believe we gained adaptive computing share in 2024 and are well positioned for ongoing share gains based

on our design win momentum. We closed a record $14 billion of design wins in 2024, up more than 25% year

over year, as customer adoption of our industry leading adaptive computing platforms expands. And we won

large new embedded processor designs.

In summary, we ended 2024 with significant momentum, delivering record quarterly and full year revenue. EPYC

and Ryzen processor share gains grew throughout the year, and we are well positioned to continue outgrowing

the market based on having the strongest CPU portfolio in our history. We established our multi-billion dollar

data center AI business and accelerated both our Instinct hardware and ROCm software roadmaps.

For 2025, we expect the demand environment to strengthen across all of our businesses, driving strong growth in

our data center and client businesses and modest increases in our gaming and embedded businesses. Against

this backdrop, we believe we can deliver strong double-digit percentage revenue and EPS growth year over year.

Looking further ahead, the recent announcements of significant AI infrastructure investments, like Stargate, and

latest model breakthroughs from DeepSeek and the Allen Institute highlight the incredibly rapid pace of AI

innovation across every layer of the stack, from silicon to algorithms to models, systems, and applications.

These are exactly the types of advances we want to see as the industry invests in increased compute capacity,

while pushing the envelope on software innovation to make AI more accessible and enable breakthrough

generative and agentic AI experiences that can run on virtually every digital device.

All of these initiatives require massive amounts of new compute, and create unprecedented growth opportunities

for AMD across our businesses. AMD is the only provider with the breadth of products and software expertise

needed to power AI from end to end across data center, edge, and client devices.

We have made outstanding progress building the foundational product, technology, and customer relationships

needed to capture a meaningful portion of this market. And we believe this places AMD on a steep, long-term

growth trajectory, led by the rapid scaling of our data center AI franchise for more than $5 billion of revenue in

2024 to tens of billions of dollars of annual revenue over the coming years. Now, I'd like to turn the call over to

Jean to provide some additional color on our fourth quarter and full-year results. Jean?

JEAN HU: Thank you, Lisa. And good afternoon, everyone. I'll start with a review of our financial results and then provide

our current outlook for the first quarter of fiscal 2025. AMD executed very well in 2024, delivering record revenue

of $25.8 billion, up 14%, driven by 94% growth in our data center segment and a 52% growth in our client

segment, which more than offset headwinds in our gaming and embedded segments.

We expand gross margin by 300 basis points and achieved earnings per share growth of 25% while investing

aggressively in AI to fuel our future growth. For the fourth quarter of 2024, revenue was a record 7.7 billion,

growing 24% year over year, as strong revenue growth in the data center and client segment was partially offset

by lower revenue in our gaming and embedded segments.

Revenue was up 12% sequentially, primarily driven by the growth of client data center and gaming segments.

Gross margin was 54%, up 330 basis points year over year due to a favorable shift in revenue mix, with higher

data center and client revenues lower gaming revenue, partially offset by the impact of lower embedded

revenues. Operating expenses were 2.1 billion, an increase of 23% year over year, as we invest in R&D and

marketing activities to address our significant growth opportunities.

Operating income was a record of 2 billion, representing 26% operating margin. Taxes, interest, and other was

249 million net expense. For the fourth quarter of 2024, diluted earnings per share was $1.09, an increase of

42% year over year, reflecting the significant operating leverage of our business model.

Now turning to our reportable segment, starting with the data center segment, revenue was a record of 3.9

billion, up 69% year over year, driven by strong growth of both AMD Instinct GPU and the 4th and the 5th

generation AMD EPYC CPU sales. Data center segment operating income was 1.2 billion, or 30% of revenue,

compared to 666 million, or 29% a year ago.

Client segment revenue was a record of 2.3 billion, up 58% year over year, driven by strong demand for AMD

Ryzen processors. Client segment operating income was 446 million, or 19% of revenue, compared to operating

income of 55 million, or 4% of revenue a year ago, driven primarily by operating leverage from higher revenue.

Gaming segment revenue was 563 million, down 59% year over year, primarily due to a decrease in semi-custom

revenue. Gaming segment operating income was 50 million, or 9% of revenue, compared to 224 million, or 16%

a year ago. Embedded segment revenue was 923 million, down 13% year over year as end market demand

continues to be mixed. Embedded segment operating income was 362 million, 39% of revenue compared to 461

million, or 44% a year ago.

Turning to the balance sheet and cash flow, during the quarter, we generated 1.3 billion in cash from operations

and a record 1.1 billion of free cash flow. Inventory increased sequentially by 360 million to 5.7 billion. At the end

of the quarter, cash equivalents and short-term investments were 5.1 billion. In the fourth quarter, we

repurchased 1.8 million shares and returned 256 million to shareholders.

For the year, we repurchased 5.9 million shares and the returned 862 million to shareholders. We have $4.7

billion remaining in our share repurchase authorization. Before I turn to our financial outlook, let me cover our

financial segment reporting, beginning with our first quarter fiscal year 2025 financial statement disclosures.

We plan to combine the client and the gaming segment into one single reportable segment to align with how we

manage the business. Therefore, reporting three segments, data center, client, gaming, and embedded. We'll

continue to provide a distinct revenue disclosures for our data center, client, gaming, and embedded businesses

consistent with our current reporting.

Now, turning to our fourth quarter of 2025 outlook, we expect revenue to be approximately 7.1 billion plus or

negative 300 million, up 30% year over year, driven by strong growth in our data center and client businesses,

more than offsetting a significant decline in our gaming business and a modest decline in our embedded

business.

We expect revenue to be down sequentially, approximately 7%, driven primarily by seasonality across our

businesses. In addition, we expect fourth quarter non-GAAP gross margin to be approximately 54%, non-GAAP

operating expenses to be approximately 2.1 billion, non-GAAP other net income to be 24 million, non-GAAP

effective tax rate to be 13%. And the diluted share count is expected to be approximately 1.64 billion shares.

In closing, 2024 was a strong year for AMD, demonstrating our disciplined execution to deliver revenue growth

and expand earnings at a faster rate than revenue, all while investing in AI and innovation to fuel long-term

growth. Looking ahead, we will build on the momentum to drive double-digit percentage revenue growth and

AARON Yeah. Thanks for taking the question. I guess I'll just ask it right out of the gate is, as we think about the GPU

RAKERS: business, and I can appreciate you talked about delivering north of 5 billion of revenue, which is extremely

impressive in 2024, I'm curious how we should think about framing the GPU, the Instinct business as we think

about 2025 and any kind of color you can provide us as far as the progression of revenue, the pace of revenue

first half or second half as we think about some of the product cycle dynamics. Thank you.

LISA SU: Sure, Aaron. Thanks for the question. So first of all, look, we were very pleased with how we finished 2024. In

terms of the data center GPU business, I think the ramp was steep as we went throughout the year, and the team

executed well. Going into 2025, as I mentioned in the prepared remarks, we're actually very happy with the

progress that we're making on both the hardware roadmaps and the software roadmaps.

So on the hardware side, we launched 325 at the end of the fourth quarter, started shipments then. We have

new designs that have come on both 300 and 325 that will deploy in the first half of the year. And then the big

news is on the 350 series. So we had previously stated that we thought we would launch that in the second half

of the year.

And, frankly, that bring up has come up better than we expected. And there's very strong customer demand for

that. So we are actually going to pull that production ramp into the middle of the year, which improves our

relative competitiveness. So as it relates to how data center-- so the overall data center business will grow strong

double digits. Certainly both the server product line as well as the data center GPU product line will grow strong

double digits.

And from the shape of the revenue, you would expect that the second half would be stronger than the first half,

just given 350 will be a catalyst for the data center GPU business. But overall, I think we're very pleased with the

trajectory of the data center business in both 2024 and then going into full year 2025.

AARON Yeah. Thank you very much. And as a quick follow-up, just thinking about the guidance overall relative to that

RAKERS: down 7% sequential, I know you mentioned seasonality across the business segments, are you assuming that

you're down sequentially in data center in total in 1Q? And how do I frame that relative to seasonality? Thank

you.

LISA SU: Yeah. Sure, Aaron. So let me give you some more color on the Q1 guide. So Q1 guide was down 7% sequentially

as Jean mentioned. And the way that breaks out in each of the segments assume that data center would be down

just about that average, so the corporate average. We would expect the client business and the embedded

business to be down more than that, just given where seasonality is for those businesses.

And then we would expect gaming business will be down a little less than that. And that's a little atypical from a

seasonality standpoint. But we're coming off of a year when there was a lot of, let's call it, inventory

normalization. And now that inventory has normalized, we would expect that would be down a little bit less than

the corporate average.

OPERATOR: And the next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question.

TIMOTHY Thanks a lot. I wanted to ask about the server CPU business. Jean, I think you have said in the past that core

ARCURI: count is going to grow mid-to-high teens, and as long as your competitors are not super aggressive on pricing,

that your business should grow roughly that much as well. Are you expecting or are you already seeing them

become a little more aggressive on pricing as they attempt to shore up their share? It sounds like they're getting

a bit more aggressive on pricing. So wondering if you still think that the server CPU business can grow in line

with that core kind of mid-to-high teens?

JEAN HU: Yeah. First, we always assume server CPU is a very competitive market, but we currently have the best lineup of

portfolio from not only Turin generation, but Genoa and then even Milan. We provide the best TCO for our

customers based on the product portfolio. So overall, we are actually quite confident about continue to drive the

server CPU business, not only growing from a unit perspective, ASP perspective and continue to gain share.

TIMOTHY Thanks a lot. And then, Jean, can you just give us a sense of where data center GPU came in for December? I'm

ARCURI: thinking it's probably in the 2 billion range. And then is it assumed to be down flat or up? Would you be willing to

give a number for March? Thanks.

JEAN HU: Yeah. I think the way to look at our Q4 performance is our data center business overall did really well. It actually

is consistent with our expectations. Of course, when we look at the server and the data center GPU, server did

better than data center GPU. But overall, it's very consistent with our performance.

LISA SU: Yeah. Maybe I'll just add, Tim, on your question as to what you would expect as we go into 2025. I think you

should assume that the first half of 2025 data center segment will be consistent with the second half of '24. And

that's true for both businesses on the server side as well as the data center GPU side.

OPERATOR: And the next question comes from the line of Vivek Arya with Bank of America Securities. Please proceed with

your question.

VIVEK ARYA: Thanks for taking my question. Lisa, a few questions on the data center GPU business. I think last year, AMD was

very explicit about setting and beating or meeting expectations. This year you have not set a specific forecast.

And I'm curious what has changed. And then if I go back to your Analyst Day in December, I think at that time,

you had sort of long-term 60% CAGR. Is it fair to assume that you can at that for '25, versus the 5 billion plus

that you did last year. So just contrast the two years and then whether AMD can grow at that 60% trend line.

LISA SU: Sure. So Vivek, thanks for the question. I think what we look at is certainly for the first year of the data center

GPU business, we wanted to give some clear progression as it was going. The business is now at scale, actually

now at over 5 billion. And as we go into 2025, I think our guidance will be more at the segment level with some

color as to some qualitative color as to what's going on between the two businesses.

And relative to your question about long-term growth rates, you're absolutely right. I mean, I believe that the

demand for AI compute is strong. And we've talked about a data center accelerator TAM upwards of 500 billion

by the time we get out to 2028. I think all of the recent data points would suggest that there is strong demand

out there.

Without guiding for a specific number in 2025, one of the comments that we made is we see this business

growing to tens of billions as we go through the next couple of years. And that gives you a view of the confidence

that we have in the business, and particularly, our roadmap is getting stronger with each generation.

So MI300 was a great start. 350 series is stronger and addresses a broader set of workloads, including both

inference as well as training. And then as we get into MI400 series, we see significant traction and excitement

around what we can do there with rack-scale designs and just the innovation that's going on there. So yeah,

we're bullish on the long-term. And we'll certainly give you progress as we go through each quarter in 2025.

VIVEK ARYA: Thank you, Lisa. And for my follow up, I would love your perspective on the news from DeepSeek recently. And

there are two parts to that, one is, once you heard the news, do you think that should make us more confident or

more conservative about the semiconductor opportunity going forward?

Is there something so disruptive in what they have done that reduces the overall market opportunity? And then

within that, have your views about GPU versus ASIC, how that share develops over the next few years, have

those evolved in any way at all? Thank you.

LISA SU: Yeah. Great. Thanks for the question, Vivek. Yeah, it's been a pretty exciting first few weeks of the year. I think

the DeepSeek announcements, Allen Institute, as well as some of the Stargate announcements talk about just

how much the rate and pace of innovation that's happening in the AI world.

So specifically relative to DeepSeek, Look, we think that innovation on the models and the algorithms is good for

AI adoption. The fact that there are new ways to bring about training and inference capabilities with less

infrastructure actually is a good thing because it allows us to continue to deploy AI compute and broader

application space and more adoption.

I think from our standpoint, we also very much the fact that-- we're big believers in open source. And from that

standpoint, having open source models, looking at the rate and pace of adoption there, I think is pretty amazing.

So to the overall question of how should we feel about it? I mean, we feel bullish about the overall cycle. And

similarly, on some of the infrastructure investments that were announced with OpenAI and Stargate and building

out, let's call it, massive infrastructure for next generation AI.

I think all of those say that AI is certainly on the very steep part of the curve. And as a result, we should expect a

lot more innovation. And then on the ASIC point, let me address that, because I think that is also a place where

there's a good amount of discussion.

I have always been a believer in you need the right compute for the right workload. And so with AI, given the

diversity of workloads, large models, medium models, small models, training, inference, when you're talking

about broad foundational models or very specific models, you're going to need all types of compute. And that

includes CPUs, GPUs, ASICs and FPGAs.

Relative to 500 billion plus TAM going out in time, we've always had ASICs as a piece of that. But my belief is,

given how much change there is still going on in AI algorithms that ASICs will still be the smaller part of that TAM,

because it is a more, let's call it specific workload optimized, whereas GPUs will enable significant

programmability and adjustments to all of these algorithm changes.

But when I look at the AMD portfolio, it really is across all of those pieces. So CPUs, GPUs, and we're also

involved in a number of ASIC conversations as well as customers want to really have an overall compute partner.

OPERATOR: And the next question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your

question.

JOSHUA Hey, guys. Thanks for taking my question. Obviously, it was good to see MI355X ex pulled into midyear. But I

BUCHALTER: wanted to clarify, you said first half '25 data center GPU likely consistent with second half '24. And I was

wondering if you could speak to whether or not the shape of the first half changed over the last few months and

is potentially related to this pulled in timeline. It could be a potential air pocket ahead of that launch? Or if this

was consistent with how you saw things playing out as MI350, MI325X ramps more fully. Thank you.

LISA SU: Yeah. Thanks for the question, Joshua. No, I would say, from our standpoint, we've gotten some incrementally

more positive on the 2025 data center GPU ramp. I think 350 series was in second half always, but pulling it in

into mid-year is a incremental positive.

And from first half, second half statement, as I mentioned, we have some new important AI design wins that are

going to be deployed with 300 and 325 in the first half of the year. But with 350 series, we end up with more

content. I mean, it's a more powerful GPU, ASPs go up, and you would expect larger deployments that include

training and inference in that time frame. So the shape is similar to what we would have expected before.

JOSHUA Thank you. And believe it or not, I could ask a question on client. Obviously, the growth number in the fourth

BUCHALTER: quarter, I mean, was certainly higher than our model. Could you clarify the drivers of the strength across

desktop, notebook, and enterprise and how we should think about 1Q, and in particular, to put it bluntly, I mean,

are you worried at all about inventory build up, given how much your client revenue has outperformed the

broader PC market in the second half of the year? Thank you.

LISA SU: Yeah. Thanks for the question. Our client business performed really well throughout 2024, and Q4 was a very

strong quarter. There are a couple of reasons for that. So we should go through that. We don't believe there's

some substantial inventory build up. We actually think that what we're seeing is very strong adoption of our new

products.

So on the desktop side, we saw our highest sellout in many years, as we went through the holiday season,

launching our new gaming CPUs. Frankly, they have been constrained in the market. And we've continued

shipping very strongly through the month of January as we're catching up with some demand there. So desktop

business was very strong.

And on the notebook side, we also saw a number of our OEM partners launching new AI PCs with the slew of new

mobile part numbers that we announced at CES. We have our strongest PC portfolio on the mobile side with top

to bottom Copilot+ PC compatible products, and those are playing very well into the market.

So I think Q4 was strong. I know that there was some commentary about whether there were pull-ins relative to

tariffs. We didn't see that in the fourth quarter. I think, as I said, we saw strong sellout. Going into the first

quarter, we do expect seasonality in there. But the part of our business that is performing better than seasonality

is the desktop portion of the business. And the mobile portion of the business is, let's call it, more typical

seasonality.

But overall, I think we're very bullish on our prospects to grow client in 2025. Just given all of the drivers from

product portfolio to some of the market dynamics as well as our new commercial PCs portfolio.

OPERATOR: And the next question comes from the line of Harlan Sur with JP Morgan. Please proceed with your question.

HARLAN SUR: Good afternoon. Thanks for taking my question. For the fourth quarter, did your overall server CPU business grow

double-digit sequentially? And maybe as a follow on to that, I think Q4 was the sixth consecutive quarter of

double-digit year-over-year increases for on-prem server solutions.

On a sequential basis, I know you guys did start to see recovery in enterprise in the second quarter of last year. I

think it was strongly up sequentially in the third quarter, pretty broad based. Did enterprise servers grow

sequentially in Q4? And Lisa, how do you see the share prospects in this segment as you step into 2025?

LISA SU: Yeah. Harlan, thanks for the question. So I think, as Jean mentioned earlier, so in the fourth quarter, we did see a

sequential double-digit growth in our server business. We saw that in both cloud and enterprise. I think the

server business has been performing extremely well. We're continuing to grow our cloud footprint with more

workloads as we have the strength of the Turin portfolio in addition to Genoa and Milan.

And then to your question on enterprise, I do believe we're seeing some strong traction in the enterprise. I think

what's helping us there is, frankly, we've invested a lot more in go-to-market, and the go-to-market investments

are paying off. The enterprise sales cycle is often a 6 to 9-month sales cycle.

But as we've invested more resources into it throughout 2024, we've seen that convert into a significant number

of new POCs that are now converting into volume deployments. And as we go through into 2025, from a

competitive standpoint, we have a very strong portfolio across every price point, every core count, every

workload. So I think we see a strong 2025 for server CPUs.

HARLAN SUR: I appreciate that. Networking is a very critical part of the AI infrastructure becoming even more important. There

seems to be this misconception that AMD is behind the curve here, yet you're keeping pace, leveraging the

incumbent ethernet technology, strong installed ecosystem.

You guys are spearheading the alternate ethernet consortium. You've got your Infinity Fabric technology for

scale-up connectivity. So as you continue to drive customer adoption of your overall AI platforms, what's the

feedback been like on your AI networking architectures? And any networking-related innovations the team's

going to be bringing to the market this year?

LISA SU: Yeah. Thanks, Harlan, for that question. No question. Networking is an extremely important part of the AI

solution, and it's an area that we have been investing and spending quite a bit of effort with our customers and

our partners jointly. The way to think about it is that our networking proof points are actually increasing as we're

going from MI300 to MI325 to MI350 to MI400. So in each of those points, we're increasing the number of proof

points.

I think people want to see more clusters of hours. Certainly, on inference, we've shown great performance and

total cost of ownership. We now also have a number of training systems that we are putting on board. And the

important part there is the networking. We have worked very closely with our partners on ethernet. We believe

that this is the right technology for the future.

In addition to third-party networking solutions, we're also, with our Pensando team, developing our own in-house

AI NIC that Forrest mentioned at our Q4 advancing AI event. And as we look forward, working with our

customers, we are actually standing up full rack solutions at both the 350 level as well as in the MI400 series.

So I think the net of it is we believe that, yes, it is absolutely very important. And in addition to all of the

hardware and software work, the system level scaling is super important. And we are on track to deliver that with

our roadmap.

OPERATOR: And the next question comes from the line of Blayne Curtis with Jefferies. Please proceed with your question.

BRAYNE Hey. Thanks for taking my question. Lisa, I just want to follow up the data center GPU business, obviously, a very

CURTIS: strongly year-over-year. But it seems for your commentary, the sequential growth kind of slows for the next 3

quarters. So I just want to understand the why. Obviously, you have some new products coming. So maybe it's

just the shift to the new products.

I also want to just ping your brain on in terms of when you look at the ASIC storylines, there seems to be a shift

to focus on training versus inference. So just your perspective, I know a lot of your workloads initially were

inference. Are you seeing any shift in terms of the demand from your customers between training and inference

as well?

LISA SU: Yeah. Sure, Blayne. Look, the way I would say it is. We saw a tremendous growth as we built up the data center

GPU business throughout 2024. So I think what we're seeing is we're continuing to do new deployments. We're

continuing to bring on new customers. Clearly, we are going through a little bit of a product transition time

frame, in the first half of the year.

But the key is bringing in the MI350 series was a very, very important for us and for the customer set. So the fact

that hardware has come on clean and we've learned a lot from the initial deployments of MI300, I think is very

positive. And this is as we might expect, given the overall landscape of deployments.

And then to the second part of your question, as it relates to ASICs, I really haven't seen a big shift at all in the

conversation. I will say that the conversation, as it relates to AMD, is kind of the following. People like the work

that we've done in inference. But certainly, our customers want to see us as a strong training solution. And that's

a consistent with what we've said. We've said that we have a stepwise roadmap to really show each one of those

solutions.

On the software side, we've invested significantly more in some of those sort of the training libraries. We talked

about Harlan's question earlier about networking. And then this is about just getting into data centers and

ramping up tens of thousands of GPUs. So from my standpoint, I think we're making very good progress there.

And I just want to reiterate on the ASIC side. Look, I think ASICs are a part of the solution, but I want to remind

everyone they're also a very strong part of the AMD toolbox. So we've done semi-custom solutions for a long

time. We are very involved in a number of ASIC discussions with our customers as well. And what they like to do

is they'd like to take our baseline IP and really innovate on top of that. And that's what I think differentiates our

capability is that we do have all of the building blocks of CPUs, GPUs, as well as all of the networking

technologies that you would need to put the solutions together.

CURTIS:

MATT RAMSEY: Operator, I think we have time for two more callers, please.

OPERATOR: OK. The next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed.

STACY Hi, guys. Thanks for taking my questions. I want to ask this a little more explicitly. So you said your server

BERNSTEIN: business was up strong double digits sequentially in Q4. My math suggests that could have even meant that the

GPU business was down sequentially. And given your guidance for, I guess, flattish GPUs in the first half of '25

versus second half of '24. Again, does the math not suggest that you'd be down sequentially both in Q1 and in

Q2. Am I doing something wrong with my math? Or what am I missing here?

LISA SU: Yeah. Perhaps, Stacy, maybe let me help give you a little bit of color there. I don't think we said strong double

digits. I think we said double digits. So that perhaps is the-- so the data center segment was up, 9% sequentially.

Server was a bit more than that. Data center GPU was a little less than that. I think for some of the models that

are out there, you might be a little bit light in the Q3 data center GPU number.

So there might be some adjustments that need to be done there. But I think your suggestion would be incorrect.

If you just take the halves, second half '24 to first half '25, let's call it roughly flattish, plus or minus. I mean, we'll

have to see exactly how it goes. But it is going to be a little bit dependent on just when deployments happen. But

that's currently what we see.

STACY Got it. Thanks. And I guess for my follow-up, maybe the follow on there, do you think your exit rate on GPUs in

BERNSTEIN: '25 is higher than your exit rate in '24? Are you willing to commit to that?

LISA SU: Absolutely. Yes, of course. It would be hard to grow strong double digits otherwise, right?

OPERATOR: And the final question comes from the line of Toshiya Hari with Goldman Sachs. Please proceed with your

question.

TOSHIYA HARI: Hi. Thank you so much for squeezing me in. Lisa, I had a question on the server CPU business. I'm curious how

you're thinking about the market this year. And if you can delineate between cloud and enterprise, that would be

really helpful. And then part B to that question, in your prepared remarks, you talked about you all having more

than 50% share across the major hyperscalers. How would you characterize the competitive intensity at those

customers vis-a-vis some of the internal custom silicon that's expected to ramp over the coming quarters and

years?

LISA SU: Sure, Toshiya. So let me say, as we look into 2025, I think we see a good server market between cloud and

enterprise. i think as we went into the early part of '24, there was a little bit of, let's call it, less investment on the

CPU side as people were optimizing investments for AI. We saw that pick up in the second half of the year in '24,

and we would expect that to go into '25.

So the enterprise refresh cycles are coming in again. And certainly, there are a number of cloud vendors that are

now, let's call it, reupdating some of their data centers. And then your second question was, as it relates to--

TOSHIYA HARI: It was the competitive landscape.

LISA SU: Sorry.

TOSHIYA HARI: Yeah, with custom silicon. Yeah.

LISA SU: Yeah. Look, I think it's about the same. What I would say, Toshiya, is, it's less about custom silicon versus x86.

It's much more about do you have the right product for the right workload? And look, the server market is always

a competitive market. What we've done, and you've seen it in our Zen 4 product line as well as in our Zen 5

product line, we've expanded the design points for each of the core generations so that we have cloud native and

then we have enterprise-optimized low core count, high core count, highest performance, best perf per dollar.

And I think as we do those things, I think we are continuing to grow share across both cloud and enterprise. And

look, it's always very competitive. We take every design win very seriously. But we're winning our fair share. And

I think that's the strength of the product portfolio. And also I think there's a good amount of trust for our delivery

capability as we've built up our franchise over the last number of years.

TOSHIYA HARI: That's great. Thank you. And then as a quick follow up, maybe one for Jean. So your guiding gross margin to 54%

in the first quarter, I'm curious what some of the major puts and takes are and the things that we should be

cognizant of going into Q2 and more importantly, the second half. Given your data center commentary skewed

more to the second half, I would expect margins to improve in the second half. But, yeah, if you can run through

the pluses and minuses, that would be really helpful. Thank you.

JEAN HU: Yeah. Thanks for the question. You're right. Our gross margin is primarily driven by our revenue mix. I think

when you look into to 2025 Q1 guide, not only data center continue to grow significantly year over year, at the

same time, client business is also growing year over year. So overall, the revenue mix is quite consistent with the

Q4.

So the gross margin guide is 54. I think for the first half, if the revenue mix is at this level, we do feel the gross

margin will be consistent with the 54. But going into second half, we do believe the data center is our fastest

growth driver for the company, and that will drive the gross margin to step up in second half.

MATT RAMSEY: All right. With that, I think we are ready to close the call now, operator. I just wanted to say thank you to

everybody that listened and participated today and for your interest in AMD. Thank you very much.

OPERATOR: Thank you. And ladies and gentlemen, that does conclude today's teleconference. We thank you for your

participation. You may disconnect your lines at this time.