Prime Highlights:
- AMD expects its overall revenue to grow about 35% per yearover the next three to five years, driven mainly by its data center business.
- The company’s data center division could grow around 80% annually, potentially reaching tens of billions in sales by 2027.
Key Facts:
- AMD plans to use rack-scale systems with up to 72 chipsto handle large-scale computing tasks, competing with Nvidia’s similar setups.
- The market for data center components and systems could reach $1 trillion by 2030, growing approximately 40% per year.
Background:
AMD CEO Lisa Su has announced strong growth plans for the company. AMD expects its overall revenue to grow by about 35% per year over the next three to five years, driven mainly by its data center business.
Speaking at AMD’s first financial analyst day since 2022, Su said the data center division could grow around 80% per year, potentially reaching tens of billions in sales by 2027. Su also projected that AMD could capture a double-digit share of the data center Artificial intelligence chip market, currently dominated by Nvidia, which holds over 90% of the market.
“The growth potential is significant given the traction we’re seeing with both announced customers and those collaborating closely with us,” Su told analysts.
AMD has been actively forging partnerships to strengthen its position in the AI sector. Notably, the company signed a deal with Open Artificial intelligence, under which the Artificial intelligence startup will purchase billions of dollars’ worth of AMD Instinct AI chips over multiple years. The partnership could also see OpenAI take a 10% stake in AMD, while AMD continues to secure deals with Oracle and Meta.
AMD plans to use rack-scale systems with up to 72 chips to handle big computing tasks, competing with Nvidia’s similar setups.
Su said the market for data center parts and systems could reach $1 trillion by 2030, growing about 40% each year. In fiscal 2024, AMD reported $5 billion in AI chip sales, significantly ahead of earlier market forecasts.
While much of the focus was on AI, Su reassured investors that AMD’s traditional businesses, including Epyc CPUs, gaming chips, and networking components, continue to perform strongly. “Every part of our business is firing on all cylinders, and that’s a very encouraging position to be in,” she said.
Despite AMD shares falling slightly in extended trading, investors welcomed the news that gross margins in the coming years are expected to range between 55% and 58%, surpassing analyst expectations.
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