By Arsheeya Bajwa and Max A. Cherney
(Reuters) -Advanced Micro Devices forecast third-quarter revenue above market estimates on Tuesday, banking on demand for its artificial intelligence chips staying strong.
Shares of the Santa Clara, California-based company rose roughly 6% in extended trading.
AMD benefits from large cloud operators buying the company’s AI and other chips. Some view the company as an alternative to Nvidia. Both Meta Platforms and Microsoft are customers of AMD’s MI300 line of AI chips.
AMD forecast revenue of $6.7 billion, plus or minus $300 million, for the third quarter compared with analysts’ average estimate of $6.61 billion, according to LSEG data.
On an adjusted basis, the company forecast gross margin of about 53.5% for the third quarter, compared with estimates of 53.6%.
In the second quarter, AMD’s data center revenue, its biggest segment, jumped 115% to $2.8 billion, just topping estimates of $2.79 billion, according to Visible Alpha.
Total revenue in the quarter rose 9% to $5.8 billion, which came in above estimates of $5.72 billion.
AMD, which is among the largest providers of PC chips, also benefited from a recovery in the personal computer market after its worst slump in years. New computer AI features are reviving consumer demand.
In the second quarter, AMD reported revenue for PC chips of $1.5 billion, compared with estimates of $1.43 billion, according to Visible Alpha.
The company had adjusted second-quarter earnings of 69 cents per share, topping analyst estimates of 68 cents a share.
Adoption of generative AI technology has driven demand for powerful chips capable of handling the specific processing requirements of applications such as OpenAI’s ChatGPT.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Devika Syamnath and Cynthia Osterman)
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