Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Welcome to our global audience across Bloomberg television and radio.
Speaker 2: We're joined by AMD's CEO, Lisa Sue. And it was
Speaker 2: such an interesting quarter to look back at data center
Speaker 2: in particular CPU strength, not just accelerators, strong AI outlook
Speaker 2: on accelerators, gaming PC and then some concern about the
Speaker 2: future of the China business. But Caroline and I Lisa
Speaker 2: have talks for quite a while now about AMD as
Speaker 2: the best performing chip stock so far this year. I
Speaker 2: wondered if we start by just asking what in the
Speaker 2: quarter changed for AMD, what the kind of biggest move
Speaker 2: forward was, do you think.
Speaker 3: Yeah, absolutely so, first of all, and Caroline, great to
Speaker 3: be here with you. We always look at these things,
Speaker 3: and so when we have a business where all of
Speaker 3: our businesses are actually performing extremely well, it's a good
Speaker 3: it's a good place to be. So we had a
Speaker 3: very strong first half of the year, you know, second
Speaker 3: quarter up thirty two percent.
Speaker 4: Year over year.
Speaker 3: We're guiding to a third quarter you know, up twenty
Speaker 3: eight percent. And underneath that what you see is, you know,
Speaker 3: first of all, data center business is doing extremely well.
Speaker 3: Our server CPUs are continuing to gain share in cloud
Speaker 3: and in enterprise. One of the things that we're seeing
Speaker 3: with AI is the AI investments from the largest hyperscalers
Speaker 3: are actually pulling you know, both GPU and CPU revenue, you.
Speaker 4: Know, which is good for us overall.
Speaker 3: You know, agentic AI actually requires lots and lots of
Speaker 3: compute going forward. We're also seeing strength in you know,
Speaker 3: PCs as well as gaming. Our products are extremely well positioned,
Speaker 3: whether you're talking about you know, consumer or commercial. And
Speaker 3: then we're also seeing you know, some improvement in the
Speaker 3: embedded side of our business as you know, that is
Speaker 3: also you know, going to I would say, a return
Speaker 3: to growth in the second half of the year. So
Speaker 3: we've seen a lot of positive signals over the last
Speaker 3: ninety days in terms of, you know, what the market
Speaker 3: needs from computing and sort of the investment and things.
Speaker 2: You know.
Speaker 3: There are some questions about China, of course, which you know,
Speaker 3: we can certainly talk about.
Speaker 2: Well, let's talk first about the AI Accelerator outlook, because
Speaker 2: actually from analysts to investors to the develop a community,
Speaker 2: when we say that you're coming on the show, we
Speaker 2: get questions from all quarters. You had said that the
Speaker 2: AI Accelerator business will grow to the tens of billions.
Speaker 2: And what I'm kind of seeing is people just want
Speaker 2: granularity from me, Lisa a little bit like when does
Speaker 2: that happen? And when does it happen? And you talked
Speaker 2: about the hyperscalers, but what's the growth pathway to tens
Speaker 2: of billions in accelerator revenue?
Speaker 4: Yeah?
Speaker 3: Absolutely, ed, So let me give you a few important markers.
Speaker 3: So what we said is the second half of the year,
Speaker 3: our growth would be primarily driven in the data center
Speaker 3: by accelerators. We've launched a new product just in ju
Speaker 3: I three fifty five product. It's extremely competitive. We really
Speaker 3: like how we stack up in terms of total cost
Speaker 3: of ownership for inferencing and training workloads. Customers really like
Speaker 3: that product. That's driving some of our second half growth,
Speaker 3: and certainly when we talk about our sequential growth into
Speaker 3: Q three, that's being primarily driven by.
Speaker 4: That accelerator capability.
Speaker 3: And now when you extend forward, you know, I've said
Speaker 3: that the AI TAM for accelerators and data center will
Speaker 3: be over five hundred billion over the next couple of years.
Speaker 3: You know, we expect to get a large portion of
Speaker 3: that new accelerator TAM and that's how we get to
Speaker 3: tens of billions of dollars. Very key is also you know,
Speaker 3: we've accelerated our roadmap and so we are on an
Speaker 3: annual cadence, and next year we'll have yet a new
Speaker 3: capability with our MI four hundred series, which will bring
Speaker 3: full rack level solutions, which will be another giant step
Speaker 3: forward in terms of capability.
Speaker 4: For you know, AI solutions.
Speaker 3: So I think that's the roadmap and path for the
Speaker 3: next couple of years. We're really excited about the traction.
Speaker 3: We're getting lots of customer validation saying hey, you're on
Speaker 3: absolutely the right path, and you know we're making you know,
Speaker 3: strong progress towards those goals.
Speaker 1: Lisa, the granularity there was demanded time and time again
Speaker 1: on that earning score with analysts was around China though,
Speaker 1: And I know it's so hard to give because in
Speaker 1: many ways, as m I threeh eight, it's depending on
Speaker 1: the licenses from the US government. How are those discussions
Speaker 1: going with the US government. How quickly do you think
Speaker 1: they can get through the backlog?
Speaker 4: Yeah, Caroline, definitely.
Speaker 3: Look, you know, I know people always want precision, and
Speaker 3: what I will give you is exactly how things are
Speaker 3: playing out from our standpoint, I think we've seen an
Speaker 3: improvement over the last ninety days. You know, ninety days ago,
Speaker 3: you know, we did not expect to believe to ship,
Speaker 3: to be able to ship to China because of some
Speaker 3: of the regulations. I think this administration, you know, the
Speaker 3: Department of Commerce, the government has actually been very open
Speaker 3: to trying to find the right balance between national security
Speaker 3: and ensuring that we have AI USAI technologies proliferated across
Speaker 3: the world.
Speaker 4: So we think that's a great balance.
Speaker 3: We now know that we have a number of licenses
Speaker 3: that are under review. We've been given good indications that.
Speaker 4: Those are moving through the review process.
Speaker 3: And you know, we will certainly inform everyone when the
Speaker 3: licenses are granted. But given that it's hard to predict
Speaker 3: exact timing. Just given all of the things that are
Speaker 3: in front of the government at the moment, we thought
Speaker 3: the right thing to do right now is just say, hey,
Speaker 3: let's not include that in the third quarter revenue. But
Speaker 3: even with that, we're growing twenty eight percent year over year,
Speaker 3: which is fantastic growth rate. And if you asked me,
Speaker 3: you know, what we've learned in the last ninety days,
Speaker 3: We've learned that the demand is even stronger in the
Speaker 3: second half of the year. Then we necessarily thought maybe
Speaker 3: just a few months ago.
Speaker 1: And analysts really cooperated and thought it was right that
Speaker 1: we should see such caution perhaps and not show up
Speaker 1: in the numbers. But Lisa, I'm interested in the inventory
Speaker 1: that you had been very clear about the eight hundred
Speaker 1: million dollar knock on the fact that you couldn't access
Speaker 1: China for a while. I know that most of those
Speaker 1: manufacturing hadn't been complete, but do you think you can
Speaker 1: unwind that eight hundred million how much do you think
Speaker 1: can you bring that back to bear?
Speaker 3: Well, we certainly expect that once licenses are approved that
Speaker 3: we will restart our supply chain and get those in place.
Speaker 3: We do have, you know, a bit of time that
Speaker 3: it takes to complete those, but we would expect to
Speaker 3: be able, you know, to ship some of those products
Speaker 3: as licenses are approved. And you know, again the exact
Speaker 3: timing will depend on when licenses are approved. But I
Speaker 3: again would hope that we don't get caught up in
Speaker 3: you know, something that I would say is moving actually
Speaker 3: in the right direction, and really see like the overall
Speaker 3: business is doing extremely well. Right when I look at
Speaker 3: data center growth. When I look at client and gaming growth,
Speaker 3: and really the return to growth in the embedded those
Speaker 3: are the key aspects to really understand about where the
Speaker 3: business is today.
Speaker 2: Lisa. The final question that we have on China, if
Speaker 2: I may, is something that we've also discussed quite often
Speaker 2: with Nvideo and Jensen One, which is the idea that
Speaker 2: in the interim period you just outlined, China's domestic chip
Speaker 2: makers have made some progress on their own accelerators. Does
Speaker 2: a m D make an assessment of that of how
Speaker 2: performance a comparable Huawei or other Chinese accelerator is relative
Speaker 2: to them? I three hundred family.
Speaker 3: And of course I mean long it's a very competitive
Speaker 3: market out there. At the end of the day, everybody
Speaker 3: wants AI computing, like AI computing is the foundation for
Speaker 3: you know, all the great things that we know that
Speaker 3: AI can add to, you know, businesses and you know
Speaker 3: sort of the overall capabilities. So yes, we're always looking
Speaker 3: at the competitive environment. That being the case, you know,
Speaker 3: I think we are well positioned overall. Our roadmap for
Speaker 3: the rest of the world is very strong, and we
Speaker 3: think it is just getting strong longer as we go forward,
Speaker 3: and as it relates to China. It's something that we
Speaker 3: have to work through with the administration, but as I said,
Speaker 3: we've had very close conversations and we're making good progress there.
Speaker 3: So from that standpoint, you know, I think the overall
Speaker 3: competitiveness of our AI roadmap has never been stronger, and
Speaker 3: we're excited about what we can deliver across you know,
Speaker 3: AI GPUs as well as you know, our our CPU
Speaker 3: franchise and all of the rest of our portfolio.
Speaker 2: This is Bloomberg Tech Live on Bloomberg Television and Bloomberg Radio,
Speaker 2: and we're speaking with a m D CEO, Lisa Sue
Speaker 2: Strong in PC strong in server, particularly CPU. Is that
Speaker 2: an a m D capturing market share story or is
Speaker 2: that just a rebound in demand generally story? Lisa Well, I.
Speaker 4: Think it's both.
Speaker 2: Ed.
Speaker 3: I think the demand is is good. I think the
Speaker 3: demand patterns are better. But clearly we're very very competitive
Speaker 3: with our products. I think we leadership CPUs in both
Speaker 3: server and client. We've shown significant traction in cloud as
Speaker 3: well as enterprise, and I think going forward you're going
Speaker 3: to see, you know, enterprise customers want the best solution
Speaker 3: out there, and that is you know, a MD for computing.
Speaker 1: And gaming NISA so strong. I'm interested into the nuance
Speaker 1: of pull forward because you said on the call that
Speaker 1: you didn't see a whole lot of pull forward. Are
Speaker 1: people trying to get ahead of tarifs and price increases,
Speaker 1: But did you see any.
Speaker 4: You know, very little, Caroline.
Speaker 3: I think what we look at mostly is not just
Speaker 3: what we're selling in to customers, but we actually look
Speaker 3: at what's being sold out at end customers, and what
Speaker 3: we're seeing being you know, really transferred to end customers
Speaker 3: is good demand. I mean, people are refreshing their data centers,
Speaker 3: which is very positive. Right We're in a place where
Speaker 3: computing is important, and so we're seeing strong refresh cycles
Speaker 3: on the data center side. We're seeing strong pull through
Speaker 3: of our of our solutions in the in the enterprise,
Speaker 3: in PC, and then from a gaming standpoint, again, we
Speaker 3: have a very strong product cycle. So you know, there's
Speaker 3: it's always hard to tell exactly what the impact of
Speaker 3: the current tariffs are, but I would say that that's
Speaker 3: the smaller part of the impact on our business. The
Speaker 3: larger part is just strong products, you know, very good
Speaker 3: traction from customers and looking at a stronger second half.
Speaker 1: Of the year, a stronger second half of the year
Speaker 1: where you take some market share from Nvidia. Lisa, how
Speaker 1: are you seeing that grow out and the ability to
Speaker 1: compete with the next ranger chips.
Speaker 3: Well, we are very bullish on our overall roadmap capability.
Speaker 3: I think the second half of the year has a
Speaker 3: number of customers, you know, really broadly adopting a MD.
Speaker 2: Lisa, I have a question from our audience, if that's
Speaker 2: okay a viewer of Bloomberg Tech and as you know,
Speaker 2: like loads of AMD employees, your peers, technology industry people
Speaker 2: want to hear what you have say. I'm just going
Speaker 2: to read it to you. Can Lisa, please explain AMD's
Speaker 2: winning and gaming and consoles. But AI is where the
Speaker 2: margins are. Now, what's the plan to make a MD
Speaker 2: indispensable to the next open AI and not just cost
Speaker 2: effective alternative? I think to invideor is what they're saying.
Speaker 4: Well ed.
Speaker 3: The best way to say that is for you know,
Speaker 3: those of you who know us as a company, you
Speaker 3: know we execute extremely well.
Speaker 4: You know, our roadmaps are strong.
Speaker 3: We're very excited about all of the progress that we've made.
Speaker 3: You know, I three hundred was an excellent product. I
Speaker 3: three p fifty is you know, a big increase above that,
Speaker 3: and then our next generation is also and the key
Speaker 3: for us if you look at our history, our history
Speaker 3: is doing what we say we're going to do, delivering
Speaker 3: to customers, delivering total cost of ownership and with that,
Speaker 3: you know, being a great partner. And so from that standpoint,
Speaker 3: I think you can be very confident that we have
Speaker 3: a strong roadmap and we're going to execute on it well.
Speaker 3: And you know, our largest customers want to have a
Speaker 3: dependable and good partner.
Speaker 1: It's been wonderful spending time with you, Lisa sou A
Speaker 1: m d CEO. We thank you very much