Advanced Micro Devices (AMD) 31 Oct 232023 Q3 Earnings call transcript

Greetings, and welcome to the AMD Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

And it is now my pleasure to introduce to you Mitch Haws, Vice President, Investor Relations. Thank you, Mitch.

You may begin.

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there achieving AI than multiple in all and In Thank are of customers momentum quarter, milestones Windows and road generation with third and will AI the software our We growth, years. in hardware for AI AI top bottom delivering well the Microsoft line take Engine are by with strong on PCs, you, our afternoon and more today. working our listening now designs XX and good in Windows powered of in line we Mitch, maps biggest next to our those accelerating advances to the than executed the significantly advantage notebook more on Ryzen that user XX market, on-chip closely experience enable in solutions.

deploy MIXXX In our the an Data to Instinct Center, by and growing accelerators, the latest software committed ROCm supported software open multiple customers suite of large hyperscale hardware-agnostic ecosystem. adoption

third X% at the quarter results, sequentially driven processor year-over-year to record sales. server Ryzen and $X.X financial CPU revenue revenue grew billion, strong and Looking X% by

our of and CPU server segment and record than EPYC Xth $X.X share Data in revenue revenue. gained crossing the XX% over grew server for and of a as Turning represent demand XX% shipments. revenue solid processor server Center to sequentially, in up Gen processor was quarterly revenue as CPU quarter Xth EPYC processor Gen resulted results. year-over-year flat to more sequentially majority the revenue segment billion both Xrd unit families We

performance deliver Google, HPC, workloads. launched XXX and instances Tencent spend. AMD-powered instances bare new metal Oracle, for workloads EPYC a environment grew the their percentage memory including EPYC processors multiple revenue optimizing remained that of Amazon, while public expanded in strong the hyperscalers quarter CPU leadership general cloud in mixed deployments and power and demand as to In while quarter, by sequentially purpose, general infrastructure from optimized Nearly internal instances cloud, others, double-digit the their Microsoft,

as our expanded actively double-digit closed platforms the number pharmaceutical enterprise and soft, performance revenue enterprise In of new a paying enterprise, leading technology off aerospace, and on-prem TCO advantages customers indications services, Genoa with investments while remains wins are the that by significant increased financial we grew overall and of customers, and demand sequentially. EPYC percentage are strong seeing quarter-on-quarter. go-to-market testing We multiple automotive, significantly

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broader quarter Instinct as Data our business in accelerators Data made customer next-generation particularly have our investments Center performance. portfolio, and significant progress MIXXX and our road leadership for the in third inferencing software at our MIXXXX multiyear Looking training Instinct delivers the maps significant in that in GPU and Center hardware traction we resulted we made our GPU

now we the of or are to MIXXXX expectations. Production shipments support coming weeks. production earlier and Instinct the Supercomputer, GPU On of of to MIXXXA side, MIXXXx hardware on and our lead Exascale with Instinct begin track month OEM started bring-up validation El accelerators exceeding continue and cloud this to and in customers performance accelerators shipments progressing the Capitan meeting to plan MIXXXA APUs our

our and enhancing the On side, great software expanded features ecosystem the we our quarter. AI performance in software further progress the of software ROCm made and

minimal parity customers for with code MIXXX run TensorFlow hardware. GPUs now AMD Instinct regularly CUDA Hugging fully and Instinct into and on production-ready easily updated enterprise on validated In and PyTorch being ROCm Face for enabling with the addition other to data Instinct Lamini, ecosystems, models changes. announced their achieved deploy running AI mainline supported accelerators integrated LLMs LLMs are start-up, they MIXXX to software GPUs, AI to on fine-tuned specific

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progress forward AI purchase ramps and and AMD in as our cloud commitments $X $X look XXXX Data to history. road map the event. I details in year. now sales we progress revenue Center sharing the the expect $XXX product Based quarter AI on exceed This revenue would customers, on growth billion approximately make throughout making million with the December at fourth execution in be from rapid we billion our in are MIXXX more ramp to to to fastest our GPU

Client than inventory our our grew our and Ryzen of processors notebook normalized strong and as market Revenue our to Sales significantly Ryzen featuring a Ryzen leadership demand to for of sequentially CPUs levels on-chip Revenue and doubled efficiency $X.X desktop industry-leading wide we performance began sequentially processors across demand client to quarter that in and for our core both powered patterns. billion. seasonal Series XXXX more latest-generation saw X accelerator, XX% energy by Turning year-over-year as XXXX the returning range XX% the AI deliver our Zen in segment. PC increased workloads.

X Zen design, by In expanded and workstations on Threadripper commercial, we client performance new we that rendering powered launched multi-threaded business. on unmatched applications. processors Threadripper PRO first our as our PRO for Core simulation Dell, CPUs HPE set our of workstation focus margin-accretive growing deliver portion and this announced an of based Lenovo professional

multiyear a Looking the PCs redefine capabilities leadership software coming forward, we experience to of AI ecosystem the on map of the enable deliver road built will new compute are generation years. Ryzen computing that Windows AI fundamentally executing over Microsoft's top to on

billion X% declined revenue lower by sales sequentially our to GPUs. year-over-year $X.X offset to turning Revenue partially Gaming increased Now Radeon of semi-custom segment. and as X% was

declined revenue the console generation continues Although demand the than in prior for line our with in for overall higher point semi-custom Microsoft this significantly strong tracking on generation this sales based console cycle, for SoC and projections consoles. Sony

for by of In year-over-year driven and Gaming our performance increased XXXXp the Graphics, enthusiast offer in price gamers. channel. RX that GPUs new Radeon sequentially, launch We expanded demand Series the desktop grew revenue both series leadership with XXXX XXXX

segment. to Embedded our Turning

SoCs applications. with quarter we expected, test memory-bound significant expanded for lead levels. portfolio as times HBM in Sequentially, that performance data year-over-year our of memory revenue inventory with and on and As to launches revenue billion. focused We SoC declined the $X.X adaptive reducing network, normalized first XX% our center, the customers Versal decreased deliver leadership on-chip aerospace X% and efficiency

next-generation that announced is our We space-grade deployment. SoC and reprogramming enhanced AI and the only during unlimited that solution also development supports industry's Engine integrates Versal after an

to latency the our has latest that their delivers been in generation a Since grown over our ago, X.X our products. card already training Alveo Xx a we closing Accelerator our latency trading platforms. prior driven in little multiple significantly, For of market, firms has our fintech leadership business Embedded launched by deployed improvement ultra-low compared and acquisition Xilinx by years

elevated to inventory decline Embedded sequentially current through levels the our of on first based through as segment customers XXXX. ahead, Looking expect working visibility, half continue revenue we

GPUs the term, larger compute broad FPGAs, our significant portfolio portion CPUs, traction can for Over we based address Embedded medium of and on business our a design needs. and growth SoCs differentiated opportunities win see our that our embedded adaptive and strong of customers'

significant sales. pleased driven client In quarter of results, the and server financial Zen our third with acceleration summary, X I'm processor by

quarters, demand processors. in partially our semi-custom business, lower where by Embedded we offset the cycle. in next revenue, by given growth are strong at in and both we This Data growth softening Looking Center EPYC driven and Instinct business of the console couple will expect our be

the returns market on PC commercial well share product to the of of positioned the and based we patterns, profitable gain are market we premium portions our offerings. strength in As seasonal to the believe

our focused our AI more are AI hardware to portfolio, expanding look AI leadership event. and road computing capabilities footprint. I Advance weeks our forward on Together progress our product a maps sharing accelerating software our details entire our few across in executing at on and on We We enterprise

Jean provide third our to over call the results QX. for to turn to additional like outlook quarter on color and Jean? I'd our Now

then a of delivered our a revenue revenue segment Client Embedded increased Gaming was results and partially per On billion year-over-year with by and results revenue for the share in and X% start diluted earnings Thank you, the everyone. revenue. good We of afternoon, review and outlook fourth XXXX. third I'll better-than-expected for quarter third quarter Lisa, with fiscal current quarter provide our financial the of offset growth $X.X lower of basis, $X.XX. segment as

was were Revenue mix. driven Client growth up Gross XX% segment billion, X representing was $X.X approximately sequentially, investment R&D AI year-over-year revenue and stronger increase the product percentage XX% X% XX%, up Operating billion, $XXX Client primarily was growth an other income opportunity. $X.X both interest Center margin. year-over-year, driven in and support Operating the was by expense Data significant primarily segment. driven our by margin and expenses point by of higher to a Taxes, million. operating

quarter, third same was diluted compared the to share the year. $X.XX earnings last period For $X.XX in per

primarily revenue Now in a to enterprise or of Center to processor increased AI was $X.X flat to was $XXX product decline XX% as a R&D Center with Data grew million by revenue customers. income SoC Starting XX% to the growth by EPYC or was of operating future our turning in growth sales offset Center segment year Xth primarily investment support generation $XXX was operating year-over-year to adaptive and our both segment, reportable ago. income sales. compared sequentially, revenue strong due Data and segment. million mix. sales cloud EPYC product Data processors XX% driven the revenue billion, Lower

continued XX% Ryzen was ramped sales Client and PC driven segment to $X.X Ryzen conditions mobile we basis, billion, revenue On higher XX% revenue market by as sequential grew improve, our processors. year-over-year, income operating primarily million $XX of was a and to to up of loss series of million a OpEx revenue disciplined by higher or revenue meet XX% ago, an operating strong driven $XXX demand. segment XXXX year management. Client a compared

We segment that to Client in the are quarter. returned profitability the pleased third

X%, Radeon Gaming semi-custom in in On decrease year-over-year, expectations in year Gaming segment revenue X% partially our declined to by $X.X the fourth basis, cycle. of revenue, billion, a increase due a segment down primarily are the offset we sales. console sequential with in now as GPU was line revenue

by or was XX%, to million segment down was to embedded compared inventory a operating sequential in revenue due a of $X.X $XXX year-over-year, to primarily $XXX segment customers higher or segment sales or year XX% correction primarily Gaming declined basis, On lower at revenue driven was operating ago, $XXX income Radeon of Embedded to end GPU XX% revenue segment the X% Embedded market. primarily million revenue million X% income billion, million a compared or communication XX% year markets. to several due ago. $XXX revenue.

balance Turning sheet the to cash the flow. and

X.X $XXX $XXX we $X.X and million We to authorization. million. primarily cash, by shares fourth and by the disaster taxes have $X.X the cash made cash free in $XXX investment in to efforts expect million share California deferred from strong equivalents shareholders, $X.X sequentially $XXX returned cash approximately pay repurchasing relief was was billion. remaining flow decreased the At billion quarter, quarter, in Inventory generated we the operations million During from short-term In IRS. quarter, of billion. previously end the taxes, million cash we to and million due the at to $XXX available repurchase

Now quarter turning fourth to XXXX our outlook.

percentage, We Center Embedded to the revenue approximately to we Year-over-year, expect revenue the segment market. minus by of Data by Client segments to decline Sequentially, the to where Client decline we segment be grow the the $X.X approximately and segment revenue strong Gaming and and are and X% double-digit Gaming decline, double-digit million, additional Center to expect an double-digit of billion, increase to expect by embedded $XXX X% in Data plus console to sequentially. and up year-over-year percentage. softening strong be given segment increase Embedded for or demand we segment the percentage, to cycle, due in the

non-GAAP be shares. $X.XX expected billion count diluted approximately XX% We operating the rate expect X.XX XX.X%, non-GAAP to effective expenses gross to non-GAAP be tax to share margin billion, approximately to and be approximately be is

quarter, third MIXXX in high-performance additional our driven momentum, benefit demand embedded closing, with to Data X the of I'm Center In share. strong from the sales in in leadership strength ramp in accelerated growth our we despite revenue, per segment execution Gaming In market. AI quarter margin fourth earnings the the pleased gross with year-over-year products and Client and of and softening the Zen by lower of and family expect

ahead, Embedded offer and are portfolio, drive in investment targeting compelling turn the Gaming segment enable the of across Data long-term profitable us for best most to and it Looking opportunities the to positioning AI With session. the that, our broadest we Mitch growth. making one Center, Client, us industry's I'll the back to Q&A

we're happy Thank poll the John, for you, audience Jean. to questions.

the And Toshiya Goldman Sachs. with the question Instructions] Hari [Operator comes from first line of

X GPU first Lisa, the My Data Center one I is questions. had business. on

versus training think of provide of it exceeding about inference other primarily could or I of AI breadth the $X about the Is color. talked should potentially about Within 'XX you're within both? we this is again, addressing, how context a talk billion. lineup. maybe which your hoping AI? bit customer And little workloads or You revenue you What percentage was supercomputing more AI, or applications?

question. Great. the Toshiya, Thanks, for

look, we've MIXXX on overall program. significant made the So progress

happy I think made the significant we've with side. progress And customer from then technical milestones a we're very look. how also,

our Your question AI million, mostly how to we the the be some so evolves, revenue -- about HPC as ramp. approximately revenue start the of would is, it that's think $XXX fourth the to with quarter, way and said in

be AI. piece revenue quarterly, will And to we again, mostly go that to small And mostly we million into to expect go first a so actually would And quarter, continue be HPC. then AI it in ramp with range. through the $XXX we will as being as we revenue be and similar expect approximately very XXXX, that

Within across of OEMs, the out we've customer had to the hyperscalers there. good are space, board new that engagement enterprise customers from and very start-ups some AI the AI

our some be From for customer inference, significant language inference on a we of of a on given as I We inference workload very going workload workloads. well broad with memory training think for memory us. capacity. standpoint, adoption. we think But model would bandwidth would so a as broad workloads to the pleased large be see that's expect MIXXX to and performance and set MIXXX, both We're especially

on as question follow-up, then my the And a side. CPU server

in Genoa quarter. nicely about the talked growing You really

And I from growth you pickup the to you're obviously, predecessor. starting or traditional than the to that both bigger growth the accelerated signs overall primarily or that see you being talked is actually shift compute think the a the question of on and saw volume its significant side? in Is you and computing, guiding the because, seeing about I share function in market? year-to-date, growth ask growth you're compute units or to for away of been QX, but seeing QX there's improvement stabilization traditional a are that actually a are even you this

Sure.

it with performance relates way to is quarter the I So we're EPYC would pleased very frame our third overall. as it

I think is third Genoa forecasted. a EPYC, bit the We that's Plus in little Gen Bergamo we crossover actually ramped which what nicely. to had a got of ahead quarter, Xth the previously very so

And strong some both broad we've and is adoption also new enterprise would was first-party say And I growth The strong across and in so with the side, when double nice across on third-party seen I then underneath growth instances. a workloads that, cloud. pretty digits. look strong OEMs. our Cloud

of, standpoint the think I both. is of recovery or is some the it from so And it's gain? it market share

From I mixed. say market would standpoint, still it's a

allowing in and depends think the quarter from the third bit But the to us sort with a mixed region progress quarter. the depending substantially I I standpoint. then set. think of macroeconomic up fourth on EPYC and into overall, enterprise leadership Cloud the pleased on a has little we're customer is still which a ended grow of bit

Rakers question Fargo. next of Wells comes the Aaron line from And with the

think of question, I that Jean, to notion grow. would your that build quarter, off you Just endorsed last last Center the Data kind business

was I high in think the it range. single-digit

XX the year I think [ like you started ]. thinking

do guess evolved now see just question is, still rate how going level -- that? to that of setup? I changed expectation? you to $XXX And the was Has that over that course growth $XXX last the million? million of Center So underneath million that set quarter Data the how has kind that Just has it $XXX

Yes.

based second to on half. think see Data XX%. that of seeing, expect are Center for first we that half, now But the we business in I XX% said what range So similar right continue grow we approximately to we versus

very and strong business. about happy Center are our we the So of pleased momentum Data

On side, the $XXX mentioned about Lisa around million. GPU million, $XXX

through quarter, we strong As with we go a engagement customers. the have the

So we do the placing and customers we see see progress continues orders.

we through increasingly we that's guiding. when to the profile confident the go we QX revenue So are why start quarter, in about

I could that, to just if if add Aaron, that. And Yes. can add I to

what number, I has the not adoption think rate we is seen the also of us revenue in go through XXXX. but sort the our we've AI just solutions QX progression as of confidence given

Yes, just would that that's confident adequate visibility on And characterize side update look that As in you feel equation? of helpful. got at How billion those the the that you've to hit maybe Any supply you do number, you the $X side follow-up. expectations? the supply side?

Aaron. Sure,

the for planning and we've chain supply the success. So always we're last been planning year for

greater out. significantly of and higher to supply. could to be have the So But build $X forecast certainly, work billion, have we for we than with for would continue that, adequate forecast a also that chain planned supply that we current than customers

the comes question of with next Stanley. Morgan line from Moore Joe the And

up hyperscalers. Center you but did be? that fairly it's might a in talk Data us multiple you How -- X, the GPU, about I give you how concentrated of just year Can assume sense there? for concentrated you see Following might that customers breadth mention on also can the

Yes. Joe. Sure,

broadly customer So we've engaging the set. been with

call, said I that increased think Xx. engagements last earnings in had the we our

And so there MIXXX. a lot in is of interest

lot But let's and across interest. start, very call we're of hyperscalers. engaged will sort cloud, in more concentrated We it, the there's several of large enterprise a also

as of OEMs when partnerships an broaden And get we solutions, we AI strong. opportunity, quite are for with see the to customers the sort the breadth beyond the about customer initial ramp especially are we Our think set. looking certainly who of

now can that other to Great. at to there are your going Data be about, businesses? you're a Center talk getting that in volume gross And comparable look space, you the margins

Yes.

we to So the do GPU our corporate expect margin be margin on accretive gross average. gross side, to

right the beginning are of now, product. ramp course, very, of Of early we a the at very

ramp typically improve it probably to As know, some new you takes when manufacturing yield, efficiency. product, time testing you time,

to confident typically, takes to quite So But level. a is well. executing a quarters it we few ramp our margin gross team the that are really normalized

next the from of comes the UBS. with Timothy line question Arcuri And

do this to couple out ask about or a wanted That's of years, also Do obviously, to Center that think TAM. for next aspirations number even you when that be I total think can do portion, Data pretty XX%, we year. $X look larger be share go? Center Lisa, can total Where the small a you of you Data billion think do at still GPU GPU for that? XX% you have than you

this is I innings mean, that enterprise of in we all, growth I And Tim, fact it exciting is applications. business very people market, the for right? say the AI early think see I just adopting generative the productivity Yes, at truly workloads. we're of incredibly first an all would

in strength growth rate said over X the believe we could that So previously think next X the believers big or be we the market. We of compound are years. annual XX% I the

to And -- from think want like think we're strong winners we beyond will is there market. is a would product, of but we significant And map this a be standpoint, next MIXXX player generations. huge that multiple so and great couple the be market. and in our for road be to a also the win have playing we we market Certainly, in to this we

out. and the we're the progress see with making overall, set. software am say I play certainly we'll things would I and hardware how on that that customer But So encouraged with

lot wanted Gaming going seasonal. Embedded of normal sound is PC there's just I down moving and to Jean, then like be up Data ask is down, Center that as parts. And sounds And on well. a but know to March. It I

sort it up smidge? Could maybe year, how flat? shape you want us can to back like half And a just So there. next help bit? if you it about to go think even think about first little to March? how down Is a of then Is it half, be

Tim, to of color, you be Lisa Data sequentially. help we're said guiding shift mix first some majority right? just QX. in That's with The quarter the X earlier, as to Center at time. will AI El the mentioned But QX in from flattish revenue a we Capitan thing, the GPU will predominantly more for

-- have seasonally So with time you business like our a revenue cycle, that of because going QX, of server Center long we manufacturing feel general, GPU. But it's is look Gaming to Data down. business, business, similar Typically Client the be we lead business, do the level a at in seasonality. the if

now, more overall, provide execution. close just think XXXX. seasonality, Of too. provide typically Gaming sequentially, right Client QX probably if on dynamics and definitely bit have Embedded course, can now. little when But and we the we seasonally color please given especially, we focused get I down add right whole can the we really a we XXXX, color have were are and to Server we year We seeing are on more any Lisa,

think the we the very can a market MIXXX the as clients cycle. No, the we we through about the strong a various it. think I minuses, gain Center XXXX go covers well It that standpoint continues from incrementally we feel as of our then our in When as Data look be for server strength improves both well the that well, Yes. inventory think think at as business. first correction believe as and good about share, have of and growth And we to the driver product for portfolio. we I given us headwinds console as Embedded half we'll in we pluses

puts think takes. the and those I So are

next the Arya And line Vivek of of with from our comes America. question Bank

MIXXX, of ASIC your hyperscaler or customers process the many ready have of in on getting them ready. the internal solutions Lisa,

MIXXX do solution? can it incumbent replacement ASICs the workload time? think you think right, primary internal along do is coexist, over So is MIXXX, the ASICs to if GPU with both inference Or exposed for you by and

Yes.

we model look you and and at the workloads large you when inference fine-tuning think think then have in let's forward, they're model mean, you I training inferencing you Vivek, what I might might going terms of you do have, do we there. off then straight it, actually of AI call pretty a sort language of set diverse. have the foundational of what

So I that think and a in place within framework, and them. that very MIXXX us customers believe market, we the we're our with closely telling absolutely what working strong that's are has

solutions, choice MIXXX's think there -- be think I to but yes, going I will So for be I think other capable. very, the the of for particularly are GPUs LLMs, the very processing and

like server traditional makers of then it Lisa, And and a replacement seems Got core. it. depreciation CPU extending when and the the of interplay especially like relates to are line price are at But cloud kind just the ASPs traditional on question, this units, players on holding time, between per AI and the CPUs. computing. It same seems server cycle

of informs of between curious think 'XX, the What it kind take for high a as and and it units at you how were interplay on get So not unit I'm your are server you that to you up snapshot just seen that that you right? If look growth make you in ASP take. the to it what 'XX able in is do you is possible ASP, side. to but is have maybe

to CPU is on, side? traditional the deployments? us of secondly, And some is happening on computing difference interplay in give one, So what just there the kind a color server unit ASP and

Yes.

Vivek. point, good a it's think I

a environment, overall if cloud So call of been I optimization the a at of a it's in look with mixed and was I caution think then digestion mixed. some enterprise, mean, take it, inventory I bit let's market. server on XXXX, amount some There somewhat There good of, going at a right? was guys the again,

XXX I EPYC, Xth think as I get cores. XX that for that. the these to compute for because growth just CPU we market. and -- Within we've returned server somewhere Gen like lot in example, you a go realm, mean, of forward, between

do framework count is growth. but the given I modest, growth may think unit be core to capability the So will the growth, overall compute that contribute and more there ASP

So from was think a into we XXXX. it environment those as traditional go server a standpoint, I mixed CPU XXXX see improves we I trends. think and do

next line Blayne of comes the Barclays. Curtis the with And question from

side. Embedded want to I on ask the

I think being of the in last quarter, end headwinds market. you talked about the mostly communications kind

reset pre-pandemic that back to your I it down guiding is levels. And competitor if then weakness in You're spread. December. talked getting of curious kind a was about

kind you reset? You weak framed Just be of how the said that first half. curious it'd to

Yes, absolutely, Blayne.

think I look we continues communications weak markets, weak. of CapEx think I see be down So was last at and sort certainly of just quarter XG it overall. end We in sort when to

On Europe we little more of, market be bit where geographic, it, a in a let's call worse a demand soft than other end little market so bit see would industrial the geographies. in that's bit little and other

were inventory there. with just the times end is coming relatively high we given the demand of into high, other The pandemic out lead sort what that markets we was are through where just with see that good. And actually the and is

and are As down normalization. given lead times do drawing inventories the an to opportunity the normalized, that, have their they people have

result solid. And overall very what capabilities win the a of let's from like we the, that Embedded. we've have and that. design demand nice sort of that have the portfolio together combination traction sort add. of it, portfolio a is with Customers is we come of We Embedded So an view think together, classic the call gotten standpoint, some Xilinx we seen processing in we that portfolio as strong

correction, year. we of believe the the inventory have and then to growth of of couple return quarters we So the sort get of to in second next half we'll through

on And PC ask the to just then I wanted market.

of and -- what I overshipping perspective up. restocking. Intel just your you're is think if normalized in you levels little half. of of move of kind were inventory the terms you back have the that starting curious perspective first of I'm kind and to any of rate in under-shipping PC kind are run seen size Maybe the bit market of a now,

a relatively of the think fairly for million sort We a at size now, year Blayne, the up market, when again, that think say, inventory of the think and somewhere million normalized, a the looked from I is overall. When that in units so. building and we're for season and standpoint I us probably third consumption were would season are are of levels I or sort the quarter consumption strong selling Yes. like is close. XXX we XXX this about so environment holiday I to

places cycles that out as growth going there. XXXX Windows think And some we returns typical cycle a much in as high-end market about have of seasonality, it, the growing which well of portfolio. commercial. some expect strong AI call in gaming, let's we focused on And think underneath PC PC are refresh like very are premium sort we as a the to, that, product We I into and the consumer ultrathins,

So those are we -- the market. see PC sort of that's how

the comes from Cowen. question with next And of line Ramsay TD the Matt

not portfolio differently, bit question but the broadly. AI ask I more little to wanted a on GPU Lisa, your focused just maybe

one on from full servers to done competitor. innovation own just or big primary the CPU cards of on changed on accelerator how their your And surprises to quickly us et of of I not custom selling full a interconnect, systems cetera. they've a GPU is lot AI but lot think market for the

advance So on going your to look about think what networking your an update is you networking across portfolio. forward you and particularly the to of hear part just and a I'd bit road GPU how to CPU, as AI like continue map little

Matt. Thanks, Yes.

it's an all are components of important these together. putting seeing with they when we're complicated think systems about think I these you AI truly point. What is

the well the We as of working sort as together networking are very capability. putting system, with full GPUs partners our CPU, closely certainly in

area. Our helpful actually has in been Pensando this acquisition really

think I networking ecosystem have a we this we're experts world-class overall. also team and in partnered the of with some of area,

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complement and quarter, rewound of through year. second back we, have into as my down margin margin clock I the sequentially us maybe of gross would to I wouldn't the peak from some and X/X. have in you're and if of is the gross you're Jean, well the puts through just, could you team year and guess, and Sequentially, down guiding be where takes dig making where on progress got guess, But to question, able margin, the some walk margins grown quarter to pretty beginning of and fourth on the As up segment the Embedded each for fourth because I inside a you imagine would underneath. each the little Client I positive the maybe I wanted gross margin that Obviously, quarter. gross by thought segment, to better. being progress bit the guide hung

the you few are especially Yes, environment. takes, demand Yes, and question. in Matt, for there mixed a thank a puts

So let QX on first. me just comment

We gross expansion pleased XXX very are margin basis our with points. sequentially,

you the primary digits mentioned, segment, drivers. are actually declined X revenue Embedded double As sequentially. There

which Center should The our XX% is gross to provide a Data first grew definitely sequentially, one margin. tailwind

improvement margin. inventory segment some very client gross encounter correction saw Secondly, PC as did QX, we Client through segment go market, And the in margin. in in headwinds significant our with we the we gross

margin pace will I gross think in will going to Client drive forward, it the moderate, improvement Client continue improvement segment. incremental but segment of

we double QX, the major in than business, in sequentially So that digit we a growth the I QX. very decline dynamics drive say segment is in And are to Data really sequential with offset have strong more which is definitely the tailwind, Center double-digit Embedded would able growth why again.

can I primarily be especially Data year gross we second good able forward, we start half. improvement think margin, feel Embedded but next Center going mix, is our meaningful segment the should to in recover, second pretty when really and expand significantly it's gross about we margin half mix, driving more to drive

next question Seymore comes And of Ross line Deutsche Bank. with the the from

Lisa, second through us relative source providing customer When year definitely there's second been that source lists just MIXXX the this so about is so I just your GPU had competitive to But to role, that of you market, of some can and obviously, of beyond going on on a needed. the advantages side that talk you question the to go shortages a you're competitor? attractive to things. walk sixth accelerators, primary the is finding be

Yes.

I you larger different way start it's there's particular, a have from The couple we memory it bandwidth. capacity a in we compute helpful. and Ross. mean, these capable is inference, I think memory just that's the And a if very models, standpoint, a very fit of think with, designed things, X it's about GPU. product. triplet as on model the In as well to way language very on can't strong

GPUs. And we've very has where perhaps multiple need actually and this actually do memory, use more those of GPUs invest had a so You total can to the a beneficial From been models, ownership and cost more you area more fewer have standpoint. you if standpoint, infer it's work. to software from

at what across frameworks. to really also new EPYC our generation of we're sort that's make partners think of barrier you and the entry where better. move of talking about -- sort When hardware is. the work so of very going about, taking cloud the much closest the able map to towards environment, an we solution. And area It's Our very road are they're higher-level evolution. reducing optimizing on in forward, moving very customers similar a different each And partners our to actually closely more the

product excellent as we'll evolving that we through keep So of I go is the think MIXXX couple generations. an and on next

on I For the OpEx focus my to want follow-up, things. side of

I the puts might XXXX. be tight on that takes Jean, heading and what pretty into that the kept have over wondered years. just guys You

I think digits, in as think XX% are year-over-year. that OpEx takes, up you high year single about and puts success of kind as XXXX? you're Any exiting MIXXX unique all guys about sort maybe at this of driving we generally especially for

Yes, thanks question. for the

Our and an in most to the the resources team important center. our budget in envelope within in areas job has great invest data really AI reallocating absolutely done

a on can given We increase AI I Data level, we opportunities are XXXX. actually and go-to-market the the for comment will high process and Center, opportunities. address investment those have to in very R&D investment we planning tremendous both definitely in

leverage the so driving margin way faster to line operating OpEx I our and than growth, our revenue. expand investment think revenue much can drive growth. we to drive think model top really about long-term growth running operating objective is And our we That's really can is much earnings it the the about think how also company than actually expansion. faster

And the comes with Kumar from Piper Harsh Sandler. next question the line of

strategic a of had then I somewhat one. one and a Lisa, tactical you for

competitor their feasible side, manufacturing that's sort strategic would the of the cost is nodes, manufacturing better, and their the on On the your of so yours? be together significantly And as if that key AMD have center that than space, or it have line getting the the technology let's to be say, to act down that kind share think not market keep well? data you curious that out, X and in case offerings year server years as then space customer keep I'm would value-add of the provide growing what X to to a could

of with a architecture process the then only go and and sort just just I design. portfolio When XD been the what integration we and X.XD chiplets about few have of of step take usage our EPYC maybe going customers. talk think It's of the that piece forward Harsh, and X what we and over technology, of technology last Yes, engagement data leading and optimization. X and have you about generations beyond, able We're build about to with center packaging. and we we've should to the when back Zen the process is really sort sort

conversation X how the actually, efficiency. at performance only So aspect is me on it's from of pricing price really product. And Much a what is conversation. give of the the you standpoint, much holistic can

standpoint, from efficiency developed So fantastic from overall -- an we've I a products. think

ensure working closely to that portfolio. continue our overall with to are We customers evolve we our

So and I are is map for, TCO it's the value-added road is looking our headed. a think best from that's customers our where standpoint, providing what

component it center. data the that us GPU, all the but basis the portfolio you the CPU, nice DPUs, a having optimize Going I workloads not on the of a actually think really of just FPGAs, in I different forward, sort to on the gives need single think

And then a is game lot for of completely helpful, think CPUs Very from my that that follow-up, compute to talk shifting GPUs. we Lisa. to folks

was hear it your talk new the very the So with about CPUs. seeing encouraging you traction you're to and of CPUs actually generation that core EPYC

call business, was it, if CPU your to CPU the you the growth ask to I not the answer you be. would X are but curious, long-term think So what GPU curious years X I'm the business, for next, I'm prospects X for how the to

Yes.

prospects still there, that, nice sequential We're and growth types but we a of AI, even clear very some gained CPU years. And share from excitement we're large We've at sort growth underrepresented But center, I'm big seen the few last underrepresented the of the in standpoint feel and with are is you especially all right? in data market, enterprise. believer in portions diverse in a There's can look, there's going a consistently And cloud priority enterprise. business, you need of we #X much again, we've EPYC to sell the it's throughout underrepresented the we're in third-party forward. around workloads, the the lot and like a of that of more when compute set have So you look through -- workloads. a manufacturers. lot cloud which, do that, still we nice

leadership we grow and continue and that So good XXXX I business overall, to about feel EPYC will us also efforts our that think our go-to-market in beyond. help

for questions. more Operator, have we time X

Bernstein Research. next question with from of Stacy Rasgon the line And comes the

First, I QX wanted the dial just to guidance. on in

how true, likely Data double for that or what digits. is implies we going I Gaming at year? these Embedded sequentially through the XX% decline is that you've it especially of does you range. in up I sequentially, Embedded, Does the Just right? going to stable know for mean first do down weak Center that mean, forward half that does to and over XX% in grow mean But it QX? it's you I stabilize? both next context -- it think you guidance that levels are assume going be first the continue and until is And Client half to the said half. things given in If said I into that half if know the about is

Stacy. Yes. Sure,

that take comments. Jean few a then might and Let add me

a sort standpoint, So about say down down be both Embedded of be we standpoint, the very around that without sort Does QX embedded well into teens. And then without again would and teens about Center and console We the say Embedded, the comments expect go we an I your would do then would bit down I QX getting QX to Data seasonality. expect be gaming than in we down correct. as from of to of teens to as sort be and more a help? think specific, would would compared Gaming being Client need in more and that are And things there into will other was that think happen. and that. And the then comments levels lots QX, -- from that similar are down it in of Gaming,

help. does That

For my wanted to again, gross margins. ask I about follow-up,

going but much is feel like they're in versus 'XX going it if you the year? to to and expand not can think accretive trends accretive. Like given you that it's the the GPUs Data while get have be gross them take like 'XX, a how does do to like are through for I is. like Embedded as but into the And next everything year, year, full extending been to is next the they've I that actually down. because Client be and this the know look what sounds year. they're But I else. weak I how So year, do it entering growing even we yet, margins year-over-year about get things think accretive, pretty it mix Center is

X cycles very a is I'll worst you It's year first for the right, market. last the thing the the especially PC Stacy, down look industry, the it's of decades. at say one if during unusual XXXX,

second our significant down we on gross had in kind made So we QX side, cycle, on definitely, half. margin that have headwinds during of progress in QX a Client which and business,

year. gross is be Going primarily revenue think going driver Data the into is about margin to margin. think next Gaming decline, And continued expect next especially way The mix. then with Center all incremental about improve the is largest our XXXX, gross do year contributor Embedded of year, the will both to it's half. We next I facing versus second mix it and sequential the

we So think it how now. right about that's

with of comes Susquehanna. Rolland Christopher question our from final And the line

on does But out Qualcomm love CPUs. doing well. for It suggesting was guys an an love thoughts pretty has for NVIDIA There this their that Elite seems It that doing I'd TAM any Would guess ARM-based in chip. you some also could rumored have architecture there be Apple article MX for now. you that has what that interested mean moving be the might I for that expectations market. as robust. X forward? And AMD was new your PC.

Yes. Chris. Sure, question. the for Thanks

look, So our respects the ARM, ARM partner throughout of way many so we a we parts think ARM about portfolio. is use in

of actually the think been it I PCs. still robust in AI it's about the the majority volume is think is and most PC. excited as the xXX PCs Windows, very I'm in about sort a ecosystem. What of relates And I PCs, you ecosystem xXX think around to if

terms think operating of PC the I to of AI in tool on user and of really sort are an PCs data. sort is opportunity productivity what opportunity redefine

less AI in broaden of the PCs be of using a a capabilities forward. and you what about. It's to there. very are experience think exciting is Ryzen that going the that over conversation more about And going the next going years. I think what have of sort think to standpoint, I so beginning and be wave the And AI investing customers. to at about couple we're that's from And where you're I good heavily We're opportunity really the about of we instructions I to feel that that portfolio delivering

really at some really, there X market I point for the even FPGA at we not in and in in understand where stand FPGA particular. outlook, cool FPGA AI? talk Center that win. That point, Center is fintech you about this Data the And FPGA for into that. on X quick was FPGA? a we tile Can an an for or AI MIXXX could And mix Data

are in FPGAs say Yes. term. in contribution I standpoint, the it's there small data mean, about relatively compute systems. still number do sort from think of or of use the Chris, center, in another the way of a FPGAs We I the a would FPGAs element. revenue sort near I it's

you We we won't partners but think, grow is, so wins to data much are element design or our how whatever forward these will together. have we or have that that. And look, our of DPUs -- bring center going part that compute think those that GPUs ability see the be point it's going or a about some that components in is content would CPUs whether that proposition, beyond value strong centers to XXXX, FPGAs need, of And sort I we just heterogeneous or data forward. be as

for that. you thank So

question-and-answer time, this session. the At have we of reached the end

comments. for any closing Mitch to over back floor the turn to like I'd Now

That John. you today's to for today. call. Great, Thank us everyone concludes joining

and ladies this conclude teleconference. gentlemen, And does today's

for You lines at may you participation. your Thank time. this disconnect your