Advanced Micro Devices tumbled in late trading after giving a disappointing outlook for its data center business, an area where it’s struggling to catch up with AI computing leader Nvidia.
The division will grow by a percentage in the “strong” double digits this year, AMD said on a conference call with analysts, predicting that the second half would be better than the first. But in an industry that’s seen Nvidia’s sales double during each of the past two years, that wasn’t enough to impress investors.
Shares of the chipmaker slid more than 8 percent in extended trading after the report was released. The stock had already dropped 1.1 percent this year through Tuesday’s close.
Though AMD’s fourth-quarter overall revenue topped estimates — and it provided an solid forecast for the current period — the data center numbers overshadowed the other results.
Revenue in the data center division was US$3.86 billion (HK$30.1 billion) during the fourth quarter. That jumped 69 percent from a year earlier, but analysts had projected US$4.09 billion. On average, analysts are predicting that the unit will generate US$18.4 billion in 2025. That would be growth of 46 percent from 2024.
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Though AMD won market share from Intel in personal computers and servers last quarter, that area is less of a growth driver. PC chips brought in US$2.3 billion in revenue last quarter, topping the US$1.99 billion estimate.
AMD is trying to persuade some of the biggest companies in the world to include its AI products in their data center expansion plans. It’s still playing catch-up with Nvidia in this endeavor. Though AMD now generates more than US$5 billion in annual revenue from the accelerator chips that help develop AI models, Nvidia’s sales in this category exceed US$100 billion a year.
AMD’s total fourth-quarter revenue rose 24 percent to US$7.66 billion, topping the US$7.54 billion estimate. Earnings per share amounted to US$1.09, minus certain items, in line with predictions.
Total sales will be US$6.8 billion to US$7.4 billion in the current quarter, AMD said. Analysts estimated US$7.04 billion on average.
AMD was bullish about 2025 on a conference call with analysts, saying that demand for all its product groups would improve. Overall, the company sees “strong double-digit percentage revenue and EPS growth year over year,” chief executive Lisa Su said during the call.
The company said it will have better products out starting around the middle of the year, helping bolster the second half. In the first half of 2025, revenue from the AI chips will be similar to where it was in the second half of 2024, AMD said.
