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AMD reporting a revenue beat for the first quarter along with upbeat second quarter revenue guidance. Senova's Trust senior portfolio manager, Daniel Morgan, joins us now to discuss. Dan, it's always good to see you. So I got AMD up, we were up nearly 5% in the after hours, Dan. Uh, strong revenue forecast for Q2. They're looking for sales of about 7.4 billion, that does beat consensus. But what did you make of the report, Dan? Give us your initial take here.

Well, it's interesting, Josh, of course, you already reported, you know, revenue was a beat, uh, in terms of earnings were a beat, you mentioned the guide for the upcoming second quarter, think the street was looking for 7.23 billion, they did 7.4 plus or minus 300 million, which puts them above the midpoint. You know, the numbers that really stood out to me, uh, data center came in above estimates of 3.7 billion, that was up about 57%. But client compute, uh, estimate was a little over 2 billion, they came at 2.3 billion, up 68%. So it looks like, Josh, there were a lot of worries coming into this quarter that data center would slow down in terms of the acceleration and growth, but they would make it up in client computing, and it looks like they have. Um, you know, they've had a lot of success with their Ryzen chip, which goes into PCs, and I think that helped them get that boost because we actually saw an acceleration in the client compute area of 68% compared to what we saw in the fourth quarter of 24. So that was very encouraging.

So in that client compute group, Dan, as you try to think through, okay, the health and resilience of the PC market over 2025, what does it look like to you?

You know, IDC's got an estimate right now of 5% growth, and a lot of that is based on people buying ahead of the tariffs, right? Even though PCs and smartphones have been exempt, uh, they're still worries that that will be lifted, and eventually you'll start to get a ramp up in terms of tariffs. So I think that's what's kind of being built into that number right now. Again, Josh, you know, nothing compared to what we saw, uh, during the work from home COVID, uh, time period where we saw a huge increase in demand, you know, for PCs and laptops. We've gone back to our more normalized mature growth rate that we've had, you know, the last 10 or 15 years, which is kind of mid to single digit.

What is, Dan, the kind of long-term AI opportunity for AMD, as it competes with NVIDIA? How do you think about that and frame it?

Well, Josh, it's interesting because on the last quarter, which was the fourth quarter of 24, management came out and said that they expect the data center group, which is where the AI chips are housed, growth to be, or to be flat versus the first quarter, or first half of the year of 25. But they said once we start ramping up on this new MI 325X, MI 350X chips, we're expecting a big push and growth in the second half of 25. So, Josh, as you know, you and I've talked many times about NVIDIA, they have the new Blackwell chip that's coming out. So that MI 325X, MI 350X for AMD are going to go head-to-head against the Blackwell ramp. So stay tuned.

Now, in April, then AMD did say we expected to record this expense about 800 million after our government, you know, imposes more restrictions on these chip exports to China. How should investors be thinking through what that means for AMD near term, long term?

You're right, Josh, they came out and announced $800 million write-off on inventory for their MI 308 chip because like you said, because of the Chinese restrictions, they're not going to be able to ship that chip out. And obviously that hurts. They did about 5 billion in the MI 300 AI chip series last year in revenue. So you can do the math. It's pretty sizable, almost 20% of what they did, they had to write off. And this is a concern, Josh, going forward because how do they make that up, right? They've got to make it up with revenues coming from another chip. And then going forward, can we expect any future charge offs that we just don't know about because we don't know what the retaliatory environment's going to be in terms of restrictions from China. So that's kind of a wild card moving into this rollout in the second half of the year, uh, for these new AI chips that they have.

Bottom line, Dan, correct me if I'm wrong, my friend, but do you own NVIDIA, but not AMD?

You know what? We own all three of the big AI chip makers. So we have a massive position in NVIDIA, as you know, because I've been on with you a couple times to talk about it. We own Broadcom, which has been really very successful for us. And we also own AMD, and those are our three players. We don't own Marvel. That would be the other option in this, in the peer group. Uh, but we have those three as kind of being our leadership players in terms of AI chips.

Last question then, quickly. Do you own Intel as well?

We own Intel, but as you know, they've been delayed on their new chips coming out in the AI space, and they haven't really been in the mix. So I still consider them a CPU player until they can come out with a bonafide GPU that can take on Blackwell.

Dan, always great to see you. Always great to have you on the show. Thank you, sir.

Thank you.