AMD's datacenter business booms as gaming takes a backseat

AMD has released its latest financial results, highlighting a stark contrast between soaring enterprise artificial intelligence demand and a slowdown in its gaming hardware sector. Total company revenue for the quarter surged 50 percent year-over-year to a record $11.5 billion, with the data center business accounting for 58 percent of total quarterly revenue.

Driven heavily by the need for AI infrastructure capacity, AMD's data center revenue jumped 107 percent from the $3.2 billion reported during the same period last year, and grew from $5.8 billion in the previous quarter. Speaking during Tuesday's earnings call, AMD CEO Lisa Su stated that the company anticipates data center segment revenue to more than double year-over-year in 2027 as well.

Conversely, AMD's gaming revenue fell 31 percent compared to the previous year down to $779 million. Price hikes and component shortages weighed heavily on sales for the Xbox Series X and S, PlayStation 5, and Valve's Steam Deck. Su explained to analysts that industry-wide component cost increases have driven up graphics card prices, dampening overall consumer demand for gaming graphics.

Stock photo for illustration only, not from the actual event

"AI is driving a significant expansion in demand for compute across all of our markets, and our leadership portfolio and growing customer visibility position us exceptionally well to capture this expanding opportunity and deliver substantial revenue and earnings growth in the years ahead"

Lisa Su

AMD CFO Jean Hu noted that overall PC and gaming business revenue grew six percent year-over-year, supported by a 23 percent increase in Client revenue thanks to strong sales performance from Ryzen processors.

Source: The Verge