AMD’s Su explains massive forecast change as stock roars on earnings

Advanced Micro Devices The major forecast revision was driven by increased demand for central processing units driven by the growth of agent AI, CEO Lisa Su told CNBC on Wednesday.

“Agents are truly driving tremendous demand in the overall AI adoption cycle, and we’re thrilled to be in the middle of it.” Su talked about CNBC’s “Squawk on the Street” program.

The company beat analyst estimates on Tuesday for both earnings per share and first-quarter revenue. Su highlighted the company’s data center business as a key driver, with revenue growing 38% year over year.

“The most important thing I can say is that we are seeing a change in workload,” Su told CNBC, adding that the demand picture has become clearer over the past 90 days after conversations with the company’s largest customers.

CPUs have seen a resurgence as computing needs change with the rise of agency AI. While the company is following Nvidia In the graphics processing units market, AMD has been the leading manufacturer of CPUs required for inference tasks.

In November, AMD predicted that the server CPU market would grow approximately 18% annually over the next three to five years.

In the company’s earnings call Tuesday, Su revised that forecast to exceed 35% growth each year, with the market topping $120 billion by the end of the decade.

The insatiable demand for AI has created capacity constraints for semiconductors. IntelNvidia and AMD.

Despite rapid growth, Su expects AMD to meet customers’ computing demand.

“Yes, it is definitely tight,” Su said of the chip supply. “When we look at it, there is a lot of demand, but for now we have a world-class supply chain developing.”

Analysts reacted positively to the increased guidance.

Goldman Sachs He raised his price target to $450 from $240. The bank also changed the chip maker’s rating from “hold” to “buy”.

— CNBC’s Kristina Partsinevelos contributed to this report.