AMD’s $3.5B AI Guidance is ‘Sandbagged,’ Citi Says
AMD, the semiconductor giant, has raised its guidance for artificial intelligence-related revenue, projecting $3.5 billion in sales this year, up from the previous estimate of $2 billion. However, according to Citigroup (Citi), this new guidance may still be underestimated intentionally by AMD. The company’s Chief Executive, Dr. Lisa Su, expressed confidence in surpassing the $3.5 billion figure, leading analysts to believe that there is potential for even greater upside.
Citi analyst Christopher Danely noted that AMD could potentially generate $5 billion this year and $8 billion in the following year from its MI300 product, which was unveiled in December to great anticipation. Furthermore, Danely shared that buy-side investors share similar expectations for the company’s performance.
It appears that Microsoft and Meta are the largest customers for AMD’s MI300. With an average selling price of approximately $10,000 for Microsoft and $15,000 or more for other customers, Danely suggested that AMD might purposely be underestimating its sales figures.
Although AMD shares experienced a decline on Wednesday due to weaker-than-expected guidance, Danely believes the company has multiple strategies to enhance gross margins throughout the year. Factors such as the return of the Xilinx business to growth in the latter half of the year, the ramp-up of the MI300, and reduced semiconductor customization are expected to contribute to margin improvements.
In premarket trading on Thursday, AMD shares rose by 1%.
This news article presents the updates on AMD’s guidance for AI-related revenue. The semiconductor company, AMD, has increased its projection to $3.5 billion from the previous estimate of $2 billion. However, analyst Christopher Danely suggests that AMD may intentionally be underestimating its performance. With the MI300 product and major customers like Microsoft and Meta, AMD has the potential to even exceed the revised guidance. The article also highlights Citi analyst’s comments regarding AMD’s gross margins and strategic growth drivers. Despite the weaker-than-expected guidance impacting share prices, AMD’s multiple strategies are expected to boost profitability.
