Advanced Micro Devices Inc (NASDAQ:AMD) stock fell 15.71% (As on February 4, 11:30:30 AM UTC-4, Source: Google Finance) after the company’s first-quarter forecast fell short of some analyst expectations. The chipmaker inked a deal with OpenAI in October that could see the startup take a 10% stake in AMD. OpenAI will deploy 6 gigawatts of AMD’s Instinct graphics processing units over multiple years beginning with an initial 1-gigawatt rollout of chips in the second half of 2026. Oracle also announced in October plans to deploy 50,000 of AMD’s AI chips beginning later this year. The demand for AMD’s chips in data centers is still strong and the company was hinting at multi-gigawatt contracts to come in the future. AMD also provided more information about its upcoming MI500 series of GPUs, which the company claims offer up to a 1,000x increase in AI performance versus its older MI300X chips. The company believes the AI data center market will be worth some $1 trillion by 2030, giving AMD plenty of incentive to ensure it has the kind of products necessary to woo potential customers away from Nvidia.
Moreover, AMD’s data center revenue for the quarter came in at $5.4 billion, topping expectations of $4.97 billion. While traders have raised consistent concerns of an AI bubble and overspending, shares of AMD and rival Nvidia (NVDA) are up significantly over the past 12 months, with AMD climbing 112% and Nvidia rising 54%. On the PC front, AMD’s client business revenue hit $3.1 billion versus an anticipated $2.9 billion. The chip designer’s gaming business saw revenue of $843 million, compared to an expected $855 million. AMD, like Intel, is contending with the global memory shortage, which could force PC makers to raise prices and lead to demand destruction that would cut into AMD’s PC and gaming segments.
AMD in the fourth quarter of FY25 has reported the adjusted earnings per share of $1.53, beating the analysts’ estimates for the adjusted earnings per share of $1.32. The company had reported the adjusted revenue of $10.27 billion in the fourth quarter of FY25, beating the analysts’ estimates for revenue of $9.67 million, according to LSEG consensus estimates.
The company said it expects $9.8 billion in revenue for the first quarter, plus or minus $300 million, versus expectations of $9.38 billion. But some analysts had predicted the chipmaker would provide stronger guidance for the first-quarter amid an ongoing boom in spending for the processors needed to power artificial intelligence.