AMD: Data Center Revenue Surges, Overshadowing Gaming
In its recent earnings call, Advanced Micro Devices (AMD) announced a remarkable surge in data center revenue, attributing to approximately 50% of its annual earnings in 2024. This growth has been fueled by heightened demand for AI-handling data centers.
Executive Vice President, CFO, and Treasurer Jean Hu disclosed a record revenue of $25.8 billion in 2024. The company attributed this gain to a 94% increase in its data center segment and a 52% expansion in its client segment.
AMD's data center segment encompasses AI accelerators, server chips, server GPUs, and FPGAs. It generated $12.5 billion in revenue last year, a significant increase from the $6.5 billion reported in 2023.
Meanwhile, the client segment, which includes Ryzen CPUs, APUs, and chipsets, contributed $7 billion to AMD's revenue in 2024, compared to $4.7 billion in 2023.
Gaming Segment Declines Amidst Data Center Surge
AMD's gaming segment, which includes discrete GPUs and semi-custom chips, experienced a revenue decline of 59% year-over-year. Despite this decline, the segment still generated $563 million in 2024.
The reduction is partly attributed to the winding down of the current generation of PlayStation and Xbox consoles, which use AMD's semi-custom silicon. AMD CEO Lisa Su remains optimistic, stating that the company is preparing for the launch of its next-generation Radeon 9000 series GPUs.
Industry Trends and Implications
AMD's data center growth mirrors a broader industry trend as companies increasingly invest in AI and cloud computing. Competitors such as Nvidia and Microsoft have also reported substantial revenue gains in their respective data center segments.
The surge in data center demand has significant implications for the environment due to the energy-intensive nature of these facilities. Tech giants like Microsoft, Google, and Meta are exploring nuclear energy as a potential solution for meeting the carbon-free power demands of data centers.