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Advanced Micro Devices Inc. experienced a sharp decline in late trading as it shared negative data center projection forecasts for a segment it has been trying to catch up with AI leader Nvidia Corp.
In a call with analysts AMD predicted data center division growth exceeding more than double digits for this year with better results expected during the latter half than the initial period. The doubling of sales during the last two years in the industry failed to appease investors given the recent results announced by the company.
After the results were released shares of the chipmaker experienced an 8% decline in extended trading. The company stock exhibited a decline of 1.1% throughout this year until its Tuesday market closure.
AMD delivered better-than-expected fourth-quarter revenue alongside encouraging revenue projections but data center sales produced a negative impact on the other results.
The recent financial report from AMD proved to be worrisome for investors and market experts because it showed that their AI equipment development seems to have slowed. The Chinese startup managed to stir up these feelings when it introduced lower-cost equipment during recent weeks.
After the chipmaker released its quarterly numbers the share prices declined because of poor data center sales performance.
In the fourth quarter data center revenue reached $3.86 billion. During this fiscal period the company's data center revenue showed a significant 69% increase compared to last year yet experts predicted $4.09 billion in sales. Analysis shows $18.4 billion revenue potential for this unit during the year 2025. The company expects a 46% business expansion from 2024 until 2025.
AMD succeeded in taking market share from Intel Corp. during the last quarter yet the personal computers and servers segment remains a lower priority growth segment. AMD revenue from PC chips reached $2.3 billion which exceeded the estimated $1.99 billion during the last quarter.
AMD directs its efforts at encouraging several major worldwide corporations to integrate its AI products into their upcoming data center growth investments. AMD maintains a disadvantage against Nvidia when it comes to this field. AMD has accrued more than $5 billion annually from its accelerator chips used in AI model development yet Nvidia generates over $100 billion from the same product category.
The fourth quarter of 2022 brought AMD $7.66 billion in revenue which surpassed analyst predictions of $7.54 billion by 24 percent. Operating earnings per share reached $1.09 in the fourth quarter as analysts had previously forecasted.
The current quarter sales projection for AMD falls between $6.8 billion to $7.4 billion according to their statement. Analysts estimated $7.04 billion on average.
During its meeting with analysts AMD expressed optimism about future market conditions by predicting a positive trend for all its product lines throughout 2025. During the call Chief Executive Officer Lisa Su mentioned the company will experience “strong double-digit percentage revenue and EPS growth year over year.”
AMD announced that better products will become available around the middle of 2025 to strengthen its performance in the second half of the year. AMD estimated the revenue projection for its AI chips to remain stable between the first half of 2025 and the second half of 2024.
Su explained that the company is presently experiencing small barriers during its product transition period.
PCs will demonstrate market growth at a percentage point within the middle single digits. The PC segment of AMD’s business unit will surpass overall market growth following its acquisition of Intel’s share of the market according to Su. Executive Vice President Marking Su has confirmed that future accelerator chip development is proceeding according to plan while encountering high levels of customer interest.
DeepSeek released information about developing an AI model that cost them considerably less money than what US competitors spent during last month. The news about less expensive hardware development methods triggered market sell-offs affecting AMD and Nvidia stock prices because analysts doubted the necessity of major hardware budgets.
AMD maintains processor production for Microsoft Corp. and Sony Group Corp. gaming console systems as part of its business operations. The gaming business division has encountered lower sales because its product generation is approaching termination phases. Gaming revenue dropped by 59% until it reached $563 million during the fourth quarter.
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