In the tech world, being number two isn’t a bad thing—especially when you're Advanced Micro Devices.
Nvidia might be the flashy headliner in the world of GPUs, but Advanced Micro Devices, or AMD, (AMD) isn’t just an alternative—it's a legitimate contender that has earned a place in gaming and data centers.
"First and foremost, it's AMD," said Patrick Moorhead, CEO and chief analyst of Moor Insights & Strategy, when discussing Nvidia's biggest competitors with Yahoo Finance.
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AMD’s market cap surpassed Intel’s for the first time in 2022. Today, AMD chips power Tesla cars and hyperscalers from Amazon's AWS to Google Cloud, a move that analysts did not expect years ago.
“It was almost a joke, right? Because for decades they had these incredible performance problems,” said Jay Goldberg, semiconductor consultant at D2D Advisory, in an interview with CNBC in 2022. “And that’s changed.”
“AMD is beating Intel on all the metrics that matter, and until and unless Intel can fix its manufacturing, find some new way to manufacture things, they will continue to do that,” Goldberg said.
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What to expect from AMD’s Q3 earnings
AMD is set to report its third-quarter earnings after the closing bell on Tuesday, October 29.
Analysts are predicting significant growth, driven primarily by strong demand in the data center segment.
Related: AMD's biggest problem is a massive opportunity
According to FactSet, analysts expect AMD to report revenue of $6.71 billion for the September quarter and adjusted earnings per share at 92 cents. In July, the company provided a Q3 revenue outlook of around $6.7 billion.
One key focus for investors will be AMD's data center revenue, which surged to $2.8 billion in Q2. For the third quarter, analysts expect this to rise to a record $3.52 billion, fueled by growing demand for AMD’s AI chips.
In July, CEO Lisa Su highlighted AMD’s strong revenue growth ahead.
“We delivered strong revenue and earnings growth in the second quarter driven by record Data Center segment revenue,” said Su in a press release. “Our AI business continued accelerating and we are well positioned to deliver strong revenue growth in the second half of the year led by demand for Instinct, EPYC and Ryzen processors.”
Earlier this month, AMD hosted its Advancing AI event, launching its next generation of AI chips. However, AMD did not update AI sales guidance or announce new large customers.
Related: Analyst adjusts AMD stock price target after AI event
In July, AMD beat expectations with adjusted Q2 earnings of 69 cents per share on revenue of $5.84 billion, which was up 9% year over year.
AMD could double its market share in the next two years, analyst said
Analysts at Northland Capital Markets said in a Monday note that they expect the company to report third-quarter revenue at or above the top of its guidance, investing.com reported.
“We expect AMD to continue to gain a share in server CPUs and AI accelerators in CY25. Slowing earnings growth will likely be OPEX as AMD invests billions of dollars to capture tens of billions of future annual revenue,” the analysts said.
Northland believes AMD will guide fourth-quarter revenue above consensus, driven by its AI, server CPU, and client product lines.
The analysts see AMD continuing to grow its share in the accelerator market, especially with Nvidia facing delays in its Blackwell product line. The firm expects AMD’s share in the AI accelerator market to rise from 0.7% in 2023 to 3.9% in 2024.
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Northland further estimates AMD could double its market share in the next two years, helped by partnerships with Google, Oracle, Microsoft, Meta, and Hugging Face.
Looking ahead, Northland projects AMD could generate between $18 billion and $28 billion in AI revenue by 2027, making up 6.2% to 9.7% of the AI accelerator market.
AMD stock is up 8.5% year-to-date, while the Nasdaq Composite is up more than 23%.
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