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Will FPGA Advancement Revive AMD's Embedded Segment Revenues?
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Key Takeaways
AMD's Embedded revenues fell 2.7% year over year in Q1 2025 amid weak demand and elevated inventories.
New FPGA launches like the VP1902 and 5G core solutions highlight AMD's innovation in embedded systems.
Collaboration with AWS brings AMD's FPGA tech to cloud workloads like genomics and video broadcasting.
Advanced Micro Devices (AMD - Free Report) acquisition of Xilinx has helped expand into multiple embedded markets, which primarily include embedded CPUs, GPUs, APUs, FPGAs, System on Modules and adaptive SoC products.
In the first quarter of 2025, the Embedded segment revenues were $823 million, down 2.7% year over year and 10.8% sequentially due to a gradual recovery in demand across various markets, including test and measurement, communications, and aerospace. Additionally, inventory levels among customers in certain areas, such as the industrial sector, remained elevated, which contributed to the slower recovery.
However, the acquisition of Xilinx has helped AMD to consistently push the boundaries of capacity in emulation devices, with each generation nearly doubling its capabilities. The latest VP1902 adaptive SoC offers an impressive 18.5 million logic cells, doubling the programmable logic density of the previous generation Virtex UltraScale+ VU19P FPGA.
AMD’s expanding portfolio has been noteworthy. In the first quarter of 2025, AMD announced the availability of a high-performance, energy-efficient 5G core powered by the Virtex UltraScale+ XCVU5P FPGA, developed in collaboration with Napatech and Druid Software.
AMD is also actively expanding its partnerships with major cloud providers, such as AWS, and incorporating its products into new FPGA-accelerated instances. In the first quarter of 2025, AWS launched FPGA-accelerated instances powered by AMD’s EPYC processors and Xilinx Virtex FPGAs. These instances are optimized for data-intensive workloads such as genomics, multimedia processing, and cloud-based video broadcasting.
Advanced Micro Devices Faces Stiff Competition
AMD is facing stiff competition in the FPGA (field-programmable gate array) market from the likes of Lattice Semiconductor (LSCC - Free Report) and Intel (INTC - Free Report) .
Lattice Semiconductor is benefiting from strong demand for its small and mid-range FPGA solutions. The company has continued to expand its footprint in this market, particularly with its Nexus and Avant product families. This has enabled the company to capitalize on new opportunities in high-growth industries.
Lattice Semiconductor has also positioned its FPGAs in high-growth applications, including AI, data centers, and advanced driver-assistance systems in automotive, along with other emerging markets, such as security, including Post-Quantum Cryptography and AR/VR in consumer markets.
In the first quarter of 2025, Intel entered into a definitive agreement to sell a 51% ownership stake in the Altera business to Silver Lake, a prominent global technology investment firm. The deal, which values Altera at $8.75 billion, marks a significant strategic move for Intel, establishing Altera as an independent entity and the largest pure-play FPGA semiconductor solutions provider. Intel will continue to hold the remaining 49% ownership stake in Altera to help contribute to its future growth.
AMD’s Share Price Performance, Valuation and Estimates
Advanced Micro Device shares have gained 6.1% year to date, outperforming the broader Zacks Computer & Technology sector’s return of 0.1%. However, the company has underperformed the Zacks Computer - Integrated Systems industry’s increase of 20.9%.
AMD Stock Performance
Image Source: Zacks Investment Research
AMD stock is trading at a premium, with a forward 12-month Price/Sales of 6.06X compared with the industry’s 3.71X. AMD has a Value Score of D.
Price/Sales (F12M)
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at 54 cents per share, which has declined 14.2% over the past 30 days, indicating a 21.74% decline year over year.
The consensus mark for 2025 earnings is pegged at $3.92 per share, which has declined 3.4% over the past 30 days, suggesting 18.43% year-over-year growth.
Image: Bigstock
Will FPGA Advancement Revive AMD's Embedded Segment Revenues?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) acquisition of Xilinx has helped expand into multiple embedded markets, which primarily include embedded CPUs, GPUs, APUs, FPGAs, System on Modules and adaptive SoC products.
In the first quarter of 2025, the Embedded segment revenues were $823 million, down 2.7% year over year and 10.8% sequentially due to a gradual recovery in demand across various markets, including test and measurement, communications, and aerospace. Additionally, inventory levels among customers in certain areas, such as the industrial sector, remained elevated, which contributed to the slower recovery.
However, the acquisition of Xilinx has helped AMD to consistently push the boundaries of capacity in emulation devices, with each generation nearly doubling its capabilities. The latest VP1902 adaptive SoC offers an impressive 18.5 million logic cells, doubling the programmable logic density of the previous generation Virtex UltraScale+ VU19P FPGA.
AMD’s expanding portfolio has been noteworthy. In the first quarter of 2025, AMD announced the availability of a high-performance, energy-efficient 5G core powered by the Virtex UltraScale+ XCVU5P FPGA, developed in collaboration with Napatech and Druid Software.
AMD is also actively expanding its partnerships with major cloud providers, such as AWS, and incorporating its products into new FPGA-accelerated instances. In the first quarter of 2025, AWS launched FPGA-accelerated instances powered by AMD’s EPYC processors and Xilinx Virtex FPGAs. These instances are optimized for data-intensive workloads such as genomics, multimedia processing, and cloud-based video broadcasting.
Advanced Micro Devices Faces Stiff Competition
AMD is facing stiff competition in the FPGA (field-programmable gate array) market from the likes of Lattice Semiconductor (LSCC - Free Report) and Intel (INTC - Free Report) .
Lattice Semiconductor is benefiting from strong demand for its small and mid-range FPGA solutions. The company has continued to expand its footprint in this market, particularly with its Nexus and Avant product families. This has enabled the company to capitalize on new opportunities in high-growth industries.
Lattice Semiconductor has also positioned its FPGAs in high-growth applications, including AI, data centers, and advanced driver-assistance systems in automotive, along with other emerging markets, such as security, including Post-Quantum Cryptography and AR/VR in consumer markets.
In the first quarter of 2025, Intel entered into a definitive agreement to sell a 51% ownership stake in the Altera business to Silver Lake, a prominent global technology investment firm. The deal, which values Altera at $8.75 billion, marks a significant strategic move for Intel, establishing Altera as an independent entity and the largest pure-play FPGA semiconductor solutions provider. Intel will continue to hold the remaining 49% ownership stake in Altera to help contribute to its future growth.
AMD’s Share Price Performance, Valuation and Estimates
Advanced Micro Device shares have gained 6.1% year to date, outperforming the broader Zacks Computer & Technology sector’s return of 0.1%. However, the company has underperformed the Zacks Computer - Integrated Systems industry’s increase of 20.9%.
AMD Stock Performance
Image Source: Zacks Investment Research
AMD stock is trading at a premium, with a forward 12-month Price/Sales of 6.06X compared with the industry’s 3.71X. AMD has a Value Score of D.
Price/Sales (F12M)
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at 54 cents per share, which has declined 14.2% over the past 30 days, indicating a 21.74% decline year over year.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
The consensus mark for 2025 earnings is pegged at $3.92 per share, which has declined 3.4% over the past 30 days, suggesting 18.43% year-over-year growth.
AMD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.