AMD's AI Ambitions Face Challenges Amid Market Volatility

AMD's Stock Just Did Something It Hasn't Done Since 2023 | The Motley Fool

AMD stock is selling off, and the company's valuation appears interesting right now. The stock market has gotten off to an interesting start this year. During the first few weeks of 2025, technology stocks in particular exhibited similar levels of momentum seen for much of the last two years -- thanks largely to ongoing support of the artificial intelligence (AI) narrative. However, the euphoria came to a screeching halt in late January after a Chinese start-up called DeepSeek released an AI model akin to OpenAI's ChatGPT. What took investors by surprise is that DeepSeek claims to have built its AI for far less than what OpenAI, Anthropic, Perplexity, and other AI start-ups in the U.S. are spending. Unsurprisingly, technology stocks have been precipitously falling over the last couple of weeks. In particular, chip stocks have really been rocked. Since news of DeepSeek started to pick up in late January, shares of Advanced Micro Devices (AMD -2.36%) have fallen by roughly 10%. Below, I'm going to analyze some interesting trends in AMD's valuation and explore if now is a good time to buy shares of the chip leader. A valuation metric that I find useful is the forward price-to-earnings multiple (P/E). This ratio takes into account what Wall Street analysts are forecasting for a company's future earnings, which can help provide a glimpse into how industry experts are viewing a company's growth prospects relative to its peers. In the table below, I've summarized AMD's forward P/E and market capitalization as of quarter-end for the last year. Data source: Yahoo! Finance AMD's forward P/E of 25.6 is essentially right in line with levels seen back in September 2023. The key difference that I see is that the company's market capitalization has grown by roughly $30 billion during this 15-month period. The slide below breaks down AMD's revenue and operating income for 2024. In my eyes, the most important detail on this slide is the company's data center operation since this segment competes most closely with Nvidia. Last year, AMD's data center business grew by 94% to $12.6 billion. More importantly, the company is generating significant operating leverage in this business as seen in the widening profit margins. Unfortunately, sluggish growth from AMD's gaming and embedded units is dragging on the company's overall revenue and profit levels -- and that is what I think investors are harping on. The closeness of AMD's forward P/E between now and September 2023 implies that analysts are modeling a proportionate rise in future earnings compared to the increase in AMD's share price over the last year or so. For this reason, the company's forward P/E multiple has essentially remained flat instead of expanding. In other words, I think analysts are modeling both continued growth in the data center business and ongoing deceleration across gaming and embedded chips -- thereby balancing the company's overall earnings picture. Personally, I'm not completely aligned with such an approach. At scale, I think accelerating revenue and profits from AMD's data center business will far outweigh the other segments that aren't part of the GPU push. The way I'm looking at AMD's valuation at the moment is that the market appears to be applying a multiple of roughly 10x to the data center operating income -- hence, the value of AMD has grown by about $30 billion since September 2023. I think AMD's data center business is much more valuable than $30 billion in the long run. Nvidia's compute and networking business is much larger than AMD's, and investors have witnessed a historic rise in Nvidia's share price for most of the last two years -- adding multiple trillions to the company's valuation. Considering AMD is already seeing adoption of its MI300 accelerators with cloud hyperscalers such as Microsoft and tech behemoths such as Meta Platforms (both of which are Nvidia customers, too), I'm bullish that AMD will emerge as a legitimate force in the data center realm sooner rather than later. I see now as a lucrative opportunity to take advantage of AMD's price action, since I see the company's valuation as massively discounted relative to Nvidia in particular.

What's Going on With AMD Stock? | The Motley Fool

Despite soaring demand for artificial intelligence (AI) accelerators and market share gains in the PC and server CPU markets, shares of Advanced Micro Devices (AMD -2.36%) have been slumping over the past year. Since peaking in early 2024, AMD stock has plunged nearly 50%. Revenue and earnings growth aren't the issue. For 2024, AMD reported a 14% jump in revenue and a 25% rise in adjusted earnings per share. AMD's fourth-quarter results were solid, beating expectations for revenue and including 69% growth and 58% growth in the data center and client segments, respectively. Long story short, things are generally going well for AMD. The stock market has a different interpretation, sending shares of AMD lower following that fourth-quarter report. While the big picture looks good, there are a few issues that could be hurting the stock. AMD generated more than $5 billion in revenue from its AI accelerators in 2024. That's up from essentially nothing in 2023. While that growth is impressive, the company's outlook for 2025 left a lot to be desired. AMD didn't provide specifics, saying instead that it expected "strong double-digit growth." There are two problems with this outlook. First, Nvidia generated more than $30 billion in data center revenue in its most recent quarter alone. On an annual basis, the market leader is outselling AMD by more than 20-fold. If there were ever an opportunity to steal market share, this is it. And yet, AMD's AI chip revenue might only grow to $7 billion or so this year. Second, demand for powerful AI accelerators is still booming. Microsoft, Meta Platforms, Alphabet, and Amazon have each announced audacious capital spending plans to boost their AI compute capacity, and that's on top of the Trump administration's Stargate initiative. Against the backdrop of this AI spending spree, AMD's AI accelerator outlook is downright disappointing. In the long run, AMD does expect its AI business to eventually generate tens of billions of dollars in annual revenue. However, an uncertain timeline has investors up in arms. AMD's data center and client computing segments are performing well. However, two smaller segments have been struggling. The gaming segment, which will be combined with the client computing segment starting next quarter, suffered a 58% revenue decline in 2024. The embedded segment, which includes AMD's acquisition of Xilinx, saw revenue tumble 33% last year due to excess customer inventory levels. For the gaming segment, there's no quick fix. AMD's gaming GPU business has been far behind Nvidia for many years, and new product launches this year are unlikely to dramatically change the story. The semi-custom chip business, which provides chips for the major game consoles, isn't going to rebound until the next generation of consoles launch. The embedded segment is particularly disappointing, given how much AMD spent to acquire Xilinx. The embedded segment generated $3.6 billion in revenue and $1.4 billion in operating profit last year, compared to a $35 billion price tag for Xilinx. So far, it's looking like AMD may have overpaid. AMD stock isn't overly expensive based on adjusted earnings, with a price-to-earnings ratio of about 33. However, a few things are important to remember. First, the data center CPU and PC CPU businesses are almost certain to slow down. The PC market in particular is sluggish, and rival Intel has been getting more aggressive about stabilizing its market share as it looks to turn itself around. AMD stock isn't expensive, but it's not cheap either. A growth slowdown could push the stock lower. Second, investors shouldn't discount the possibility that AI is a massive bubble and that the "tens of billions of dollars" long-term estimate from AMD for its AI chip business will never materialize. If AMD's AI chip business doesn't accelerate from here, a major component of the company's growth story collapses. All that being said, AMD will remain highly competitive in its core data center and PC CPU businesses, regardless of what Intel does. The company's products are great, and the era of Intel dominating those markets appears to be over. AMD makes sense as a long-term investment, but in the short run, the stock could face more challenges in 2025.

AMD's AI Data Center Revenue Soars but Shares Sink. Is It Time to Buy the Stock on the Dip? | The Motley Fool

Advanced Micro Devices (AMD -2.36%) shares fell following its Q4 earnings report as its data center revenue soared but still came in below analysts' consensus expectations. The stock is now down more than 35% over the past year, as of this writing. Let's dive into the chipmaker's fourth-quarter results to see if this dip in price could be a buying opportunity. AMD's data center business was in focus when the company reported its Q4 results. The segment's revenue surged 69% year over year and 11% sequentially to $3.9 billion. Both AMD's Instinct graphics processing units (GPUs) and EPYC central processing units (CPUs) helped drive the growth. However, analysts were expecting data center revenue to be $4.14 billion, as compiled by FactSet. The company said that its EPYC CPUs continue to gain market share in the data center. Among hyperscalers, AMD now has a market share well above 50% for its EPYC CPUs. Meanwhile, AMD said Microsoft and Meta Platforms are both using its MI300X GPUs. It said it is seeing strong interest in its next-generation MI350 series GPUs, which it plans to ramp up around mid-year. AMD will launch its MI400 GPUs in 2026. AMD's client segment, meanwhile, also grew strongly, with Q4 revenue climbing 58% year over year to $2.3 billion. AMD said it continued to gain market share in the personal computer (PC) retail space, including having over 70% market share on popular platforms such as Amazon, Newegg, and MindFactory. It is looking to outpace PC market growth in 2025, which it sees rising by mid-single digits. The company continued to see weakness in its video game and embedded segments. Gaming segment revenue plunged 59% to $563 million as its customers Microsoft and Sony worked on normalizing inventory. Embedded sales fell by 13%, hurt by weaknesses in industrial and communication markets. Overall, AMD's Q4 revenue jumped by 24% year over year to $7.66 billion. Adjusted EPS, meanwhile, soared 42% to $1.09. That beat the analyst consensus for EPS of $1.08 on revenue of $7.53 billion, as compiled by LSEG. Adjusted gross margins rose 320 basis points to 54%. This shows that the company is not just growing revenue but that its revenue is becoming more profitable as well. For the quarter, AMD generated free cash flow of $1.1 billion and and $2.4 billion for the full year. It ended 2024 with net cash and short-term investments of $5.1 billion and $1.7 billion in debt. Looking ahead, the company guided for Q1 revenue of between $6.8 billion to $7.4 billion. That would represent growth of 30% at the midpoint, showing continued revenue growth acceleration. The growth will be powered by strong growth in its data center and client businesses, offsetting a significant decline in its gaming business and a modest decline in its embedded business. For the full year, it forecast double-digit percentage revenue and EPS growth year over year. It sees both its gaming and embedded segments having modest growth. AMD is very unlikely to make any big inroads against rival Nvidia in the data center GPU market. The company just does not have the software platform to compete against Nvidia's dominance, especially in training. The company has carved a decent niche in AI inference as a viable alternative and should continue to see GPU growth as a result. However, instead of viewing AMD as a GPU afterthought, perhaps it's best to view the company as the leading data center CPU company. This is the area where AMD has been thriving and taking market share. CPUs are not as big a component as GPUs when building out AI infrastructure, but they still play an important role, and AMD is seeing strong growth as a result. The company is also gaining share in the PC market as well. From a valuation perspective, AMD trades at a forward price-to-earnings ratio (P/E) of under 24 times 2025 analyst estimates, with 41% EPS growth projected. That's a relatively attractive valuation. If you think AMD is going to be the next big GPU winner, you'll probably end up being disappointed. If you want to play the GPU market and its increasing computing power needs, Nvidia is still the best option. However, if you can appreciate AMD for its strong position in CPUs and its growth in this area, then the stock looks like a solid option to buy on this dip.

AMD crushed earnings -- so why is its stock down 9%?

Advanced Micro Devices (AMD) reported strong earnings for the fourth quarter, exceeding Wall Street's expectations for profit and revenue. However, the chipmaker's shares fell sharply in after-hours trading due to lower-than-expected data center sales and guidance for the current quarter. AMD Chief Executive Lisa Su announced that data center sales, a key indicator of the company's artificial intelligence chip revenue, are expected to contract by approximately 7% on a sequential basis. Although no specific forecasts for AI chip sales were disclosed, Su projected potential sales in the "tens of billions" over the next few years. Despite reporting an annual revenue of $25.8 billion for 2024, a 14% increase year over year, AMD faced challenges entering the competitive AI chip market dominated by Nvidia. For the fourth quarter, AMD generated $7.7 billion in revenue, a 24% year-over-year growth, with earnings of $1.09 per share, up 42% from the previous year. The data center segment was a highlight, achieving $3.9 billion in revenue, an increase of 69% year over year, while the client segment reported $2.3 billion, up 58% year over year. Conversely, the gaming segment struggled, with revenue declining 59% to $563 million, largely due to lower semi-custom sales, and the embedded segment revenue decreased by 13% to $923 million. Why AMD is leaving Nvidia unchallenged in laptop GPUs for 2025 In terms of cash flow, AMD generated $1.1 billion in free cash flow during the fourth quarter and held $5.1 billion in cash and cash equivalents at the end of the quarter. The company repurchased 1.8 million shares, returning $256 million to shareholders. Its gross margin stood at 54%, showing an increase of 330 basis points year over year, while the operating income reached $2 billion, representing a 26% operating margin. Looking ahead, AMD expects first-quarter 2025 revenue to fall to approximately $7.1 billion, slightly above Wall Street's expectations of $7 billion. However, segment weaknesses are anticipated, particularly in the gaming and embedded sectors. AMD's stock saw a 9% drop to about $109 in after-hours trading, continuing a trend of losing a third of its value over the past year, forcing investors to evaluate critical support and resistance levels. Key support is around $110, with further declines possible to $95 and $81 if selling pressure persists. Conversely, resistance may be found at $130 during any countertrend rallies. In a question-and-answer session following the earnings call, Su reiterated optimism about AMD's growth opportunities in data center and AI markets, emphasizing the potential for significant growth driven by demand for high-performance computing solutions and a robust product roadmap. Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

AMD Record Growth Driven by Data Center

Advanced Micro Devices posts strong revenue growth, beating analyst expectations, though challenges remain in specific market segments. Semiconductor designer Advanced Micro Devices (AMD 4.58%) reported fourth-quarter and full-year 2024 earnings on Tuesday, Feb. 4, that beat analysts consensus estimates. The results highlight a robust quarter, showcasing record revenue growth of 24.2% year over year, thanks largely to its Data Center and Client segments. With adjusted earnings per share (EPS) at $1.09 against analyst predictions of $1.08, AMD demonstrated its ability to outperform market expectations. Analysts had anticipated quarterly revenue of $7.53 billion, but actual revenue reached $7.66 billion, indicating a strong finish to 2024. Source: AMD. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year. Overview of AMD's Business AMD operates at the forefront of semiconductor technology, developing an array of products for Data Centers, Client, Gaming, and Embedded markets. Known for its EPYC processors and Radeon graphics, AMD's recent focus has been on expanding offerings in artificial intelligence (AI) and high-performance computing. Revenue is driven by both consumer and enterprise demand, with innovation, product diversity, and sector-specific strategies being pivotal success factors. Through strategic acquisitions and partnerships, AMD continually enhances its capabilities in AI and other emerging technology areas. The company's recent strategic focus has been on product diversification and technological innovation. Leveraging core technology, AMD aims to solidify its leadership through comprehensive solutions that address both current market needs and future industry shifts. Its competitive edge hinges on expanding its data center capabilities while innovating across the client and embedded markets. Quarterly Highlights AMD's Data Center segment notably reached $3.9 billion in Q4 revenue, up 69% from the prior year, driven by strong demand for its EPYC processors and Instinct GPUs. This performance underlines AMD's strength in providing the processing power demanded by cloud and enterprise clients. Meanwhile, the Client segment brought in $2.3 billion, reflecting a 58% increase year over year, propelled by Ryzen processor demands across both desktop and mobile markets. The Gaming and Embedded segments experienced setbacks. Q4 Gaming revenue dropped 59%, generating $563 million as semi-custom product sales slowed. The Embedded segment also saw declines, with a year-over-year reduction of 13% this quarter, primarily due to inventory adjustments. Guided by its strategic direction, AMD continues to enhance its AI capabilities. Initiatives in this domain include strategic partnerships and the launch of new AI-centric products. Key among these are collaborations with industry giants such as IBM and Vultr, utilizing Instinct MI300X accelerators, and the introduction of Ryzen AI Max and PRO-series processors. Looking Ahead In projecting AMD's outlook for Q1 2025, management forecasts approximately $7.1 billion in revenue, marking expected continued growth at an estimated 30% year-over-year increase. Adjusted gross margin is expected to be approximately 54%. AMD management said it remains firmly committed to sustaining its growth momentum, particularly within the Data Center and AI sectors. This focus is projected to sustain the company's market competitiveness well into 2025. Investors may want to keep an eye on forward guidance, with particular focus on computational and AI domains where AMD seeks expansion. Adjustments to market dynamics, demand for cloud computing, and AI infrastructure investments are anticipated to play vital roles in shaping AMD's performance. With strategic prioritization on advancing technological leadership, AMD remains poised to leverage industry opportunities in the upcoming quarters.

AMD's AI Ambitions Face NVIDIA's Dominance -- Analysts See Growth, But Challenges Remain - Advanced Micro Devices (NASDAQ:AMD)

AMD expects a slower revenue pace in 1H 2025, with a stronger second half driven by its upcoming MI350 platform release. Advanced Micro Devices, Inc. AMD shares are trading lower on Wednesday. Yesterday, the company reported fourth-quarter revenue of $7.66 billion, beating analyst estimates of $7.53 billion. The chipmaker reported fourth-quarter adjusted earnings of $1.09 per share, beating analyst estimates of $1.08 per share. AMD expects first-quarter revenue of approximately $7.1 billion, plus or minus $300 million. The company's revenue guidance represents year-over-year growth of approximately 30% at the midpoint. Here are the analysts' takes on the earnings results: BofA Securities analyst Vivek Arya reiterated the Neutral rating on the stock, lowering the price forecast to $135 from $155. The analyst noted the company's struggle to carve out a niche against NVIDIA Corporation's dominance and the rise of custom AI chips. The analyst writes AMD's fourth quarter was in line with expectations, with stronger PC sales offsetting weakness in data centers. Arya adds that first quarter sales are expected to be modestly better, driven by consumer PC and gaming, unlike Intel Corporation's weaker outlook. For the AI GPU segment, the analyst now forecasts $7.5 billion in 2025, slightly lower than the previous $8 billion estimate. See Also: AMD Vs. Qualcomm: Semiconductor Showdown Ahead Of Earnings Goldman Sachs analyst Toshiya Hari maintained Neutral rating on Advanced Micro Devices, lowering the price forecast to $125 from $129. The analyst raises 2025 and 2026 revenue estimates by 5% and 4% due to stronger Client and Gaming segments, despite lower Data Center and Embedded revenue. Non-GAAP EPS estimates for 2025 and 2026 increase by 6% and 1%, reaching $4.56 and $6.10, driven by higher revenue, partly offset by lower gross margins and higher operating expenses. The analyst also introduces 2027 revenue estimates of $46.6 billion (+18% year over year) and non-GAAP EPS of $7.66 (+26% year over year). JP Morgan analyst Harlan Sur maintained the Neutral rating on Advanced Micro Devices, lowering the price forecast to $130 from $180. The analyst notes Advanced Micro Devices' mixed demand in Embedded, with strong performance in aerospace/defense and test/emulation, but challenges in cyclical sectors like industrial and communication. However, per Sur, these sectors will stabilize by mid-year as market recovery picks up in the second half. The analyst lowers forward estimates due to weaker-than-expected demand for data center GPUs. Benchmark analyst Cody Acree reiterated the Buy rating on the stock, lowering the price forecast to $170 from $200. The analyst views the company's report and outlook as solid, attributing the softness in GPU guidance to a positive product transition. Customers are eagerly awaiting the next-gen platform, which was pulled forward, Acree writes. After surpassing its $5 billion AI GPU revenue goal for FY24, the company expects a slower revenue pace in the first half of 2025 as customers focus on existing programs while awaiting the MI350 platform release. The production ramp for MI350 has been moved up by a quarter, now expected in mid-2025 instead of the second half, Acree adds. Rosenblatt analyst Hans Mosesmann reiterated the Buy rating, lowering the price forecast from $250 to $225. Mosesmann lowers the 2025 MI300 series sales forecast to $7 billion from $9.2 billion, reflecting a flatter 2H24 to 1H25 product transition to MI325/350X. Northland analyst Gus Richard reiterated the Outperform rating on AMD, with a price forecast of $175. AI revenue is expected to stay flat in the first half of 2025 and the second half of 2024, raising concerns, but a stronger second half is anticipated, with $9.2 billion in AI revenue on the back of the MI350 in the latter half. After being oversold, Advanced Micro Devices shares bounced, and the analyst recommends buying on weakness. Price Action: AMD shares are trading lower by 7.82% to $110.16 at last check Wednesday. Read Next: Trump's Plan To Turn Gaza Into Seaside Resort, Remove 2 Million Palestinians Roundly Rejected By World Leaders Photo via Shutterstock. AMDAdvanced Micro Devices Inc$110.25-7.74%Overview Rating:Speculative37.5%Technicals Analysis660100Financials Analysis200100WatchlistOverviewINTCIntel Corp$19.752.38%NVDANVIDIA Corp$123.093.74%Market News and Data brought to you by Benzinga APIs

Is AMD in Trouble After Wednesday's Stock Drop? | The Motley Fool

Shares of Advanced Micro Devices (AMD -6.27%) took a painful hit on Wednesday. Following the chip designer's fourth-quarter report, the stock fell as much as 10.9% in the morning session. By 1:45 p.m. ET, AMD had recovered slightly to a 7.8% price drop. Did Tuesday evening's report change the game for AMD and its investors? AMD actually exceeded analyst expectations across the board in the fourth quarter. Both earnings and revenues landed slightly ahead of the analyst community's consensus targets. Indeed, the stock rose as much as 5% in Tuesday's after-hours trading. But then the earnings call started, and CEO Lisa Su described a gloomier market for artificial intelligence (AI) products than Wall Street had expected. AMD accounts for AI-related products, such as Instinct AI accelerators and EPYC system control processors in the data center segment. That division, and AMD overall, should see revenues falling 7% in the current quarter, as compared to the fourth-quarter results. Many investors saw this revenue drop as a sharp reversal of AMD's fortunes. Su's comments suggest that the first quarter's data center sales should land near the third-quarter figure, erasing a 9% gain in the fourth-quarter update. AMD's results have always been quite seasonal, showing stronger sales at the end of the year. It's just a normal business pattern at work. At the same time, data center sales now account for more than half of AMD's total sales, up from 37% in the year-ago quarter. The new Instinct MI300X accelerator is the exclusive engine behind some new AI products from Meta Platforms and Microsoft, and AI chips stood for more than $5 billion of AMD's 2024 revenues. Su expects "tens of billions of dollars of annual revenue" from these products in the near future. In other words, last night's report was not the end of the road for AMD's AI ambitions. It was just a pretty standard speed bump on a volatile road.

AMD's data center revenue comes up short, leaving investors dismayed - SiliconANGLE

AMD's data center revenue comes up short, leaving investors dismayed Investors bailed on Advanced Micro Devices Inc. after the chipmaker reported lower-than-expected revenue in its key data center segment, despite posting solid results overall. The company revealed fiscal 2024 fourth quarter earnings before certain costs such as stock compensation of $1.09 per share on record-breaking revenue of $7.66 billion, up 12% from a year earlier. The results came in ahead of Wall Street's forecasts, with analysts predicting slightly lower earnings of $1.08 per share on sales of $7.53 billion. However, the higher revenue was offset by increased costs, resulting in net income of $482 million, down from $667 million in the year-ago quarter. Gross margin, which measures the revenue that remains after subtracting the direct costs associated with producing goods or services, rose by a single percentage point to 51%. AMD Chief Executive Lisa Su (pictured) hailed 2024 as a "transformative year" for the company, in which it generated record annual revenue and saw strong earnings growth. "Looking into 2025, we see clear opportunities for continued growth based on the strength of our product portfolio and growing demand for high-performance and adaptive computing," she added. Su told analysts on a conference call that the company anticipates "strong double-digit percentage revenue and EPS growth in 2025". For the first quarter of the year, the company is forecasting sales of $7.1 billion at the midpoint of its guidance, with a higher gross margin of 54%. That compares favorably with the Street's forecast of $7 billion in sales. The numbers were largely positive, except for the performance of AMD's most critical business unit, the data center segment, which produces computer chips for data center servers. That business has been growing fast in recent quarters thanks to the insane demand the company has seen for graphics processing units that power artificial intelligent workloads. It showed good momentum in the latest quarter, with revenue up 69% to $3.86 billion. However, investors were hoping for even faster growth, and had expected the company to deliver $4.14 billion in data center revenue. They were not happy that AMD was unable to meet their lofty expectations, and the company's stock fell more than 8% in extended trading, wiping out a gain of just over 4% during the regular session. The reaction was perhaps a bit harsh on AMD, which said the data center business grew its sales by 94% to $12.6 billion in fiscal 2024, thanks to an increase in sales of its Instinct GPUs and also its EPYC central processing units, which power regular computer servers. AMD positions its newest Instinct MI300X GPU as an alternative to Nvidia Corp.'s chips, which dominate the industry, and it accounted for over $5 billion of sales in the last year, officials said. It has been embraced by some of the biggest data center operators, including Meta Platforms Inc. and Amazon Web Services Inc. One thing that may have struck investors was that AMD declined to provide a forecast for AI-related revenue for the coming year, which may add fuel to concerns that sales of the Instinct GPUs are slowing down. However, Su insisted that the company sees a "steep, long-term growth trajectory" that will eventually grow to "tens of billions of dollars in annual revenue" in the coming years. Somewhat surprisingly, Su praised the emergence of the Chinese AI company DeepSeek Ltd., which rocked financial markets last week when it became clear that its latest large language model could compete with the most advanced LLMs offered by U.S. companies, despite being built at just a fraction of the cost. Some investors fear that the rise of lower-cost alternatives might impact chipmakers like AMD, though perhaps not so much as AI developers like OpenAI. Su also hailed the Stargate project announced by U.S. President Donald Trump last month, which plans to invest $500 billion in building AI computing infrastructure to ensure the country remains at the forefront of the AI industry. "All of these initiatives require massive amounts of new compute and create unprecedented growth opportunities for AMD across our businesses," Su insisted. All of the talk and buzz around AI has meant that AMD's other key business, which sells chips for personal computers, has largely been forgotten. But it put in a stellar performance, with sales rising 58% year-over-year to $2.3 billion, above the consensus estimate of $1.9 billion. AMD's smaller gaming and embedded businesses both declined, however, reflecting sustained pressures on those segments. The gaming segment saw sales tumble by 59% to just $563 million, with the company pointing to a drop in "semi-custom" sales. Meanwhile, the embedded chip segment saw revenue drop 13% to $923 million. During the quarter, AMD's venture capital arm, AMD Ventures, participated in a number of big funding rounds, including a $333 million raise by the cloud infrastructure startup Vultr Inc., and a $250 million investment in the AI startup Liquid AI Inc. Last November, the company also announced its intention to lay-off around 1,000 workers, or approximately 4% of its total staff, in order to free up more money to invest in AI development. Today's after-hours price action means AMD's stock is down 33% in the past 12 months, compared to a 9% gain in the broader iShares Semiconductor ETF.

AMD shares tumble as CEO forecasts declining data center sales

Shares of the Santa Clara, California-based company dropped about 10% in extended trading. AMD's shares fell about 18% last year, in contrast to larger rival Nvidia's rise of more than 171%. AMD has been fighting to increase its share of the market for sophisticated AI processors sold mostly by Nvidia to heavyweight tech customers including Amazon and Microsoft.Advanced Micro Devices failed to impress investors waiting for the chipmaker to gain ground against AI heavyweight Nvidia, even as its quarterly results and revenue outlook exceeded analyst estimates on Tuesday. Shares of the Santa Clara, California-based company dropped about 10% in extended trading. AMD's shares fell about 18% last year, in contrast to larger rival Nvidia's rise of more than 171%. AMD has been fighting to increase its share of the market for sophisticated AI processors sold mostly by Nvidia to heavyweight tech customers including Amazon and Microsoft. AMD reported fourth-quarter data centre revenue of $3.9 billion, which missed the consensus estimate of $4.15 billion. The company's data centre segment is a proxy for its AI revenue as it contains revenue from its line of processors that compete with Nvidia's chips. For 2024, AMD said it generated more than $5 billion of AI chip revenue. During a conference call with analysts, AMD Chief Executive Lisa Su said the company's data centre sales in the current quarter will be down about 7% from the just-ended quarter, in line with an overall expected decline in AMD's revenue. Su declined to give a forecast for the company's AI chips, but said AMD expects "tens of billions" of dollars in sales "in the next couple of years." Summit Insight analyst Kinngai Chan said: "AMD's AI GPU is probably not tracking to investors' expectations. We continue to believe Nvidia is opening a gap against AMD in AI GPU performance and value." 'Bespoke' AI chips AMD's forecast comes as tech giants including Microsoft and Meta increasingly dedicate resources to developing their own silicon for processing large data volumes required by GenAI. Microsoft and Meta unveiled new AI chip versions last year, casting doubt on AMD's ability to compete in a race to dominate AI infrastructure. Marvell and Broadcom help other companies design their own custom chips, contrary to off-the-shelf processors provided by AMD and Nvidia and have contracts with various cloud computing companies. Su told analysts that AMD is working to compete against Broadcom and Marvell in collaborating with its customers to create custom AI chips. Reuters last year reported that Nvidia has also entered that business. "We are very involved in a number of (custom chip) discussions with our customers as well," Su said. "They'd like to take our baseline (intellectual property) and really innovate on top of that." Despite AMD's efforts, Nvidia maintains nearly an 80% share of the AI chip market, in part because of its proprietary CUDA software, which is a standard among some developers. Computer code written using the CUDA language does not easily run on AMD hardware. Customers have to incur additional, high costs to switch chip providers. The company expects revenue of about $7.1 billion, plus or minus $300 million in the first quarter, compared with analysts' average estimate of $6.99 billion, according to data compiled by LSEG. AMD - one of the largest providers of personal computer chips - is also likely to benefit from improving demand from a wave of consumers and businesses buying new PCs that can handle generative AI tasks, after a prolonged slump. Adjusted for stock-based compensation, among other things, AMD reported fourth-quarter per-share profit of $1.09, compared with a consensus estimate of $1.08. AMD reported revenue jumped 24% to $7.66 billion for the fourth quarter, compared with estimates of $7.53 billion.

Bank Of America: "AMD Has Not Yet Managed to Articulate How It Can Carve an Important Niche Versus NVIDIA's Dominance and Custom ASIC Chip's Growing Importance in AI Silicon"

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy. In recent weeks, we've continued to highlight the now-prophetic prognostication by Wolfe Research, where the Wall Street player foresaw AMD's inability "to guide AI for CY25." In fact, it was this omission more than anything else that hammered AMD shares in the post-earnings, after-hours trading session. And, this lack of clarity is now featuring prominently in the litany of commentary from major Wall Street players. For the benefit of those who might not be aware, AMD comfortably beat the top- and bottom-line consensus estimates for the fourth quarter of 2024, raking in $7.66 billion in revenue against a consensus estimate of $7.53 billion. However, the AI-critical data center segment failed to meet consensus sales expectations, with this weakness more than offset by undue strength in AMD's client computing business. Coming back, in what is a customary post-earnings commentary, Bank of America's Vivek Arya notes that AMD's guidance for the first quarter of 2025 was "modestly better" due to the ongoing strength in the company's client-facing PC/gaming business. This contrasts sharply with Intel's relatively weaker guidance for Q1, which was "impacted by its greater segment exposure to tariff-related pull-ins from customers." Critically, BofA now expects AMD to earn $7.5 billion in revenue from AI GPUs in 2025, which marks a ~$0.5 billion downgrade from the firm's previous modeling. Arya went on to note: "AMD did not guide AI GPU for the year, but just said it expects 1H25 to be flat HoH, with stronger 2H on the back of its new MI350 ramp." Accordingly, the BofA analyst lowered his target for AMD shares from $155 to $135, while noting: "... AMD has not (yet) managed to articulate how it can carve an important niche versus NVDA's dominance and custom ASIC chip's growing importance in AI silicon, with any upside surprise largely dependent on share gains against INTC in more mature markets." Elsewhere, KeyBanc analyst John Vinh chose to overlook AMD's data center-related faux pas of sorts, opting instead to rely on AMD's future market share gains in the AI GPU sphere to justify his continued 'overweight' recommendation for the stock. Even so, Vinh was crystal clear on AMD's immediate prospects in relation to the AI GPU segment: "Data Center GPUs revenues exceeded $5B in 2024, but AMD would not provide explicit guidance for 2025, [instead merely] indicating Data Center, including GPUs, would grow strong double digits this year. Additionally, with the ramp of MI355 expected midyear, Data Center growth is expected to be second-half weighted, as first-half 2025 Data Center revenues are expected to be equal to second-half 2024." Barclays, however, remains unequivocally bullish on AMD, reiterating its 'overweight' rating and a $140 price target for the stock. While conceding that "MI300 undergrew the Server CPU business in Q4 (we model $1.75B) and is guided to just flattish for 1H25 vs. 2H24," Barclays analyst Tom O'Malley pointed out that annualizing the downbeat Q1 run-rate for AMD would still imply a ~30 percent year-over-year growth in revenues, and that the "company is adamant that the business will exit CY25 above the CY24 exit rate." O'Malley noted: "The company also pointed to '10s of billions' in the next several years." While highlighting the positive catalysts for AMD, O'Malley wrote: "On the positive side, the company is moving through AI product transitions faster and plans to pull MI350 (CDNA 4) into mid-2025, then introduce a new compute (CDNA next) and rack-level architecture with MI400 several quarters later." The Barclays analyst, therefore, views the current pullback in AMD shares as a buying opportunity, taking heart from the management's "long history of executing on promised share gains."

AMD stock plunges 10% despite beating sales expectations

Shares of Advanced Micro Devices (AMD-8.59%) tumbled more than 10% on Wednesday morning, hitting a new 52-week low despite the semiconductor giant exceeding revenue expectations in its latest earnings report. The shares were trading at $108 each in the morning. In its fourth-quarter earnings report released Tuesday, the Santa Clara-based chipmaker posted mixed results. Net income was $482 million, down 28% from $667 million a year earlier. Gaming segment revenue dropped significantly, falling 59% year-over-year to $563 million. But revenue came in at $7.66 billion, exceeding the anticipated $7.53 billion. The company reported adjusted earnings per share of $1.09, slightly surpassing analysts' expectations of $1.08. AMD projected total sales of $6.8 billion to $7.4 billion for the current quarter, compared to analysts' average estimate of $7.04 billion. Although AMD lags behind its rival Nvidia (NVDA+3.88%) in selling chips for data centers, its data center unit has become the company's most crucial business segment. Recent growth has been driven by rising demand for its graphics processing units (GPUs) used in artificial intelligence. In the latest quarter, AMD reported $3.86 billion in data center sales, marking a 69% year-over-year increase. "Data Center segment annual revenue nearly doubled as EPYC processor adoption accelerated and we delivered more than $5 billion of AMD Instinct accelerator revenue," said AMD Chair and CEO Dr. Lisa Su. The company, which has been struggling with costs, reduced its global workforce by 4% in November 2024 in an attempt to focus on competing in the AI chip market. In January, AMD introduced new AI PC and gaming processors at the Consumer Electronics Show. The new Ryzen AI Max Series chips are designed for high-performance computing in "thin and light notebooks."

AMD Stock Falls 8% In Wednesday Pre-Market: What's Going On? AMD Shares Stumbles 8% In Wednesday Pre-Market. What's Going On? - Intel (NASDAQ:INTC), Advanced Micro Devices (NASDAQ:AMD)

Advanced Micro Devices, Inc. AMD saw its shares drop nearly 8% in Wednesday's pre-market trading following a less-than-stellar growth forecast for its data center revenue. The company announced its results after the market close on Feb.4. What Happened: The company's data center division, its largest revenue contributor, generated $3.9 billion in the fourth quarter, falling short of the projected $4.1 billion. The company attributed the increase to strong sales of both its Instinct GPUs and EPYC CPUs, which rival Intel Corporation's INTC processors. The company also anticipates data center revenue for the first quarter of 2025 in the range of $6.8 billion to $7.4 billion. However, it trailed the analysts' forecasts of $7.01 billion, leading to a decline in the stock price. Additionally, the company's gaming and embedded revenues saw significant declines, which may have contributed to the dip in AMD's stock. AMD reported fourth-quarter adjusted earnings per share of $1.09 on revenue of $7.66 billion, slightly beating Wall Street's forecasts. Meanwhile, the client segment, which includes PC chips, outperformed expectations with $2.3 billion in revenue. SEE ALSO: Intel 'Will Be Fighting For Every Socket' In The Data Center Business, Says Co-CEO Michelle Holthaus As Competition From AMD, Nvidia Heats Up Why It Matters: The recent performance of AMD's shares can be understood in the context of the company's ongoing struggles and restructuring efforts. The company announced plans to merge its client and gaming segments following a 59% year-on-year decline in gaming revenue. This restructuring is set to begin in the first quarter of 2025. AMD is currently battling for AI market share against Nvidia Corporation NVDA, a leader in high-powered AI chip sales while also facing stiff competition from Qualcomm Inc. QCOM. Over the last year, AMD shares have fallen over 31%, while rival Nvidia's shares have surged 70%, while Qualcomm climbed nearly 20%, according to data from Benzinga Pro. CEO Lisa Su forecasted a "strong double-digit percentage revenue and EPS growth" for 2025 for AMD's AI and data center. However, she cautioned that AI chip sales in early 2025 will be comparable to late 2024 before accelerating in the second half. READ MORE: A Look Into Qualcomm Inc's Price Over Earnings AMDAdvanced Micro Devices Inc$108.41-9.28%Overview Rating:Speculative37.5%Technicals Analysis660100Financials Analysis200100WatchlistOverviewINTCIntel Corp$19.23-0.31%NVDANVIDIA Corp$119.150.42%QCOMQualcomm Inc$171.44-0.92%Market News and Data brought to you by Benzinga APIs

Google, AMD Stock Fall on Disappointing Sales as AI Slump Continues

Alphabet's posted worse-than-expected revenues in the cloud and advanced computing segment. Just days after Nvidia stock registered its biggest single-day price drop ever, Alphabet and AMD have been hit by similar losses as markets react to quarterly earnings released on Tuesday, Feb. 4. Although overall earnings were roughly on target, both companies underperformed in the crucial data center segment, fueling concerns that massive investments in AI over the last two years have failed to deliver the expected results. AI Sale Growth Stalls After two years of unbridled growth, the release of DeepSeek last month threw cold water on the red-hot AI market, prompting investors to reconsider the sky-high valuations attributed to companies like Nvidia. Amid this reckoning, analysts turn their attention to Big Tech earnings for clues as to whether the hype is justified. However, for AMD and Google, below-expected sales and ballooning capital expenditure triggered a major price drop in post-market trading. After closing the day at $119.50, AMD stock declined nearly 10% overnight after the chipmaker predicted a decline in data center sales for the current quarter. It's a similar story for Alphabet, which reported sluggish growth in cloud computing, sparking a 6.8% after-hours slump. Data Center Investments While AMD and Google occupy different positions in the AI ecosystem, both have significant growth prospects resting on the data center market. AMD's strategy centers on the high-end AI processors that it sells to data center operators. Google, on the other hand, provides cloud computing services to AI developers. Both firms have invested billions of dollars to secure a slice of the AI pie. But as demonstrated by investors' reaction to Wednesday's earnings, there is a high bar to prove that such massive sums are justified. Despite missing its earnings targets, Alphabet's 2025 capital expenditure is set to balloon to $75 billion as the company aims at aggressive AI expansion. "That's the opportunity space," CEO Sundar Pichai said during his presentation. "It's as big as it comes and that's why you're seeing us invest to meet that moment." The Future of AI Chips For AMD, the recent earnings call underscores the challenges of operating in a dynamic AI chip market. While the company has positioned itself as a strong competitor to Nvidia, its latest projections indicate potential headwinds in the high-performance computing segment. Alongside competition from Nvidia, the rise of custom silicon also threatens the firm's AI business model, with data center operators including Amazon, Meta, and Microsoft increasingly pursuing their own independent AI chip initiatives.

AMD stock drops nearly 10% on earnings as AI data center business disappoints. Meanwhile, Nvidia pops

That's because the chipmaker's core business is selling data center chips for graphics processing units used to power AI. It's currently going head-to-head with Nvidia for market share of the lucrative, high-powered AI chip market. Shares in Nvidia (NVDA), meanwhile, were up 4% in midday trading Wednesday after Google's parent company, Alphabet, announced it will spend $75 billion in expected capital expenditures in 2025, a majority of which will go into building data centers and servers in an effort to help Google increase its AI capabilities. On Tuesday, AMD reported Q4 revenue that came in at $7.66 billion, beating estimates of $7.54 billion, and an adjusted earnings per share (EPS) of $1.09. Looking ahead to the first quarter of 2025, the chipmaker forecast revenue coming in between $6.8 billion and $7.4 billion.

AMD's Data Center Revenue Hits Record High But Misses Expectations

Advanced Micro Devices (AMD) posted fourth-quarter revenue and adjusted earnings that beat expectations, but data center sales came up short. The chipmaker's revenue grew 24% year-over-year to a record $7.66 billion, above the analyst consensus compiled by Visible Alpha. Earnings came in at $482 million, or 29 cents per share, down from $667 million, or 41 cents per share, a year earlier, falling short of expectations. However, on an adjusted basis, AMD's earnings of $1.78 billion, or $1.09 per share, beat expectations. The revenue gains came as AMD's data center sales climbed 69% to a record $3.86 billion driven by demand for the company's artificial intelligence chips, but still missed the $4.12 billion called for by analysts. Looking ahead, AMD said it expects first-quarter revenue of $6.8 billion to $7.4 billion, up from $5.4 billion in the first quarter of 2024. The midpoint of that range is above the analysts consensus of $7.01 billion. Ahead of the results, Wall Street analysts suggested AMD could be a key beneficiary as U.S. tech giants ramp up spending on AI, with Bank of America analysts suggesting worries about competition from Chinese firms like AI startup DeepSeek could push Big Tech to spend even more, to the benefit of chipmakers. AMD shares fell about 5% in extended trading Tuesday following the release. The stock has lost over a quarter of its value over the past 12 months through Tuesday's close amid concerns about the chipmaker's outlook and ability to compete with Nvidia's (NVDA) offerings.

AMD shares drop 10% on disappointing data center revenue

Lisa Su, chair and CEO of Advanced Micro Devices Inc., during the AMD Advancing AI event in San Jose, California, on Dec. 6, 2023. Advanced Micro Devices shares fell more than 10% on Wednesday after the chipmaker under-delivered on Wall Street's estimates for its important data center business. AMD reported better-than-expected results on the top and bottom lines, but it also reported data center sales of $3.86 billion. That reflected 69% growth from a year ago but fell short of the $4.14 billion in sales expected by analysts polled by LSEG. The key unit, responsible for selling advanced chips for data centers, has benefitted in recent years from growing demand for its graphics processing units, as megacap technology companies race to develop advanced artificial intelligence tools. Data center revenue grew 94% for the full year to $12.6 billion, with $5 billion of those sales stemming from AMD's AI-focused Instinct GPUs. The company is the second-largest producer for gaming after Nvidia, which has triumphed as the market leader in AI chips and ballooned in value to a nearly $3 trillion market value. "We believe this places AMD on a steep long-term growth trajectory, led by the rapid scaling of our data center AI franchise from more than $5 billion of revenue in 2024 to tens of billions of dollars of annual revenue over the coming years," AMD CEO Lisa Su said on the earnings call with analysts.

AMD's AI bets face investor scrutiny as Big Tech switches to custom chips

(Reuters) - AMD investors will closely examine the chip designer's artificial intelligence strategy when it reports fourth-quarter results on Tuesday as Big Tech's shift to custom silicon raises doubts about its place in the AI infrastructure race. Analysts expect AMD's December-quarter revenue to surge over 22% to $7.53 billion, but the company's growth prospects are shadowed by the dominance of Nvidia in the AI chip market and the rising trend of tech giants like Microsoft, Amazon.com and Meta developing custom chips. Investors see "customer silicon and Nvidia as the AI chip market going forward," said Ryuta Makino, analyst at AMD investor Gabelli Funds. Customer silicon refers to custom chips designed for specific customers, unlike off-the-shelf processors. Chinese AI startup DeepSeek's advances with models that can reportedly match or outperform Western rivals at lower costs have also raised concerns over the substantial projected spending on AI infrastructure that has been driving a rally in chipmaker stocks. Tech giants such as Microsoft, Amazon, and Meta are increasingly dedicating resources to developing their own silicon for processing large data volumes required by GenAI, with all three having unveiled new AI chip versions last year. This has boosted sales for Broadcom and Marvell Technology, which provide so-called hyperscalers with custom AI processors. Broadcom CEO Hock Tan has said the company expects AI could present as much as $90 billion revenue opportunity by 2027. The company's shares more than doubled in value last year, while Marvell rose about 83%. AMD in contrast, fell 18% in 2024. Nvidia's existing majority share of the AI chip market and its proprietary CUDA software- a standard among most developers- is likely to help cushion the company against rising custom chip adoption, said Ben Bajarin, chief executive of technology consultancy Creative Strategies. The high cost of switching chip providers presents a significant barrier to AMD making further inroads into the market. However, the push to develop sophisticated AI models could alleviate concerns as Big Tech continues massive AI spending. TD Cowen analysts, along with Omdia analyst Alexander Harrowell, expect AMD to rake in AI chip sales of as much as $10 billion this year - double AMD's forecast of $5 billion in AI processor revenue in 2024. Revenue in the company's data center chip segment is expected to jump close to 82% to $4.15 billion in the fourth quarter according to data compiled by LSEG- making up more than half of total sales. Supply for AI chips has also struggled to keep up with demand. While contract manufacturer TSMC has been working to increase capacity for advanced packaging - a key bottleneck in AI supply chains - Nvidia's ongoing ramp-up of its latest "Blackwell" AI chips could limit AMD's ability to secure manufacturing capacity, Mizuho analysts said. AMD's personal computer unit is set to grow close to 33% to $1.94 billion and has been steadily eating into rival Intel's market share. Analysts have noted PC makers possibly stocking up on chips in December ahead of potential tariffs from U.S. President Donald Trump, boosting chipmakers--a dynamic that helped Intel beat fourth-quarter revenue estimates last week. AMD's fourth-quarter net income is set to rise more than 61.4% to $1.08 billion. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Tasim Zahid)

AMD's AI bets face investor scrutiny as Big Tech switches to custom chips

AMD investors will closely examine the chip designer's artificial intelligence strategy when it reports fourth-quarter results on Tuesday as Big Tech's shift to custom silicon raises doubts about its place in the AI infrastructure race. Analysts expect AMD's December-quarter revenue to surge over 22% to $7.53 billion, but the company's growth prospects are shadowed by the dominance of Nvidia in the AI chip market and the rising trend of tech giants like Microsoft, Amazon.com and Meta developing custom chips. Investors see "customer silicon and Nvidia as the AI chip market going forward," said Ryuta Makino, analyst at AMD investor Gabelli Funds. Customer silicon refers to custom chips designed for specific customers, unlike off-the-shelf processors. Chinese AI startup DeepSeek's advances with models that can reportedly match or outperform Western rivals at lower costs have also raised concerns over the substantial projected spending on AI infrastructure that has been driving a rally in chipmaker stocks. Tech giants such as Microsoft, Amazon, and Meta are increasingly dedicating resources to developing their own silicon for processing large data volumes required by GenAI, with all three having unveiled new AI chip versions last year. This has boosted sales for Broadcom and Marvell Technology, which provide so-called hyperscalers with custom AI processors. Broadcom CEO Hock Tan has said the company expects AI could present as much as $90 billion revenue opportunity by 2027. The company's shares more than doubled in value last year, while Marvell rose about 83%. AMD in contrast, fell 18% in 2024. Nvidia's existing majority share of the AI chip market and its proprietary CUDA software- a standard among most developers- is likely to help cushion the company against rising custom chip adoption, said Ben Bajarin, chief executive of technology consultancy Creative Strategies. The high cost of switching chip providers presents a significant barrier to AMD making further inroads into the market. However, the push to develop sophisticated AI models could alleviate concerns as Big Tech continues massive AI spending. TD Cowen analysts, along with Omdia analyst Alexander Harrowell, expect AMD to rake in AI chip sales of as much as $10 billion this year - double AMD's forecast of $5 billion in AI processor revenue in 2024. Revenue in the company's data center chip segment is expected to jump close to 82% to $4.15 billion in the fourth quarter according to data compiled by LSEG- making up more than half of total sales. Supply for AI chips has also struggled to keep up with demand. While contract manufacturer TSMC has been working to increase capacity for advanced packaging - a key bottleneck in AI supply chains - Nvidia's ongoing ramp-up of its latest "Blackwell" AI chips could limit AMD's ability to secure manufacturing capacity, Mizuho analysts said. AMD's personal computer unit is set to grow close to 33% to $1.94 billion and has been steadily eating into rival Intel's market share. Analysts have noted PC makers possibly stocking up on chips in December ahead of potential tariffs from U.S. President Donald Trump, boosting chipmakers-a dynamic that helped Intel beat fourth-quarter revenue estimates last week. AMD's fourth-quarter net income is set to rise more than 61.4% to $1.08 billion.

AMD's Q4 revenue hits $7.66B, up 24% but stock falls

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Advanced Micro Devices reported revenue of $7.658 billion for the fourth quarter, up 24% from a year ago. But AMD's stock price fell in after-hours trading to $113.66, down 4.89%. Net income was $482 million for the fourth quarter ended December 31, down 28% from $667 million a year earlier. AMD saw data center segment revenue of $3.9 billion in the quarter, up 69% from a year ago. It was driven by record Epyc CPU and Instinct GPU revenues -- and the demand is being driven by the rapid adoption of AI. For 2024, data center segment revenue was a record $12.6 billion, an increase of 94% compared to the prior year, driven by growth in both AMD Instinct and Epyc processors. Client revenue in the quarter was $2.3 billion, up 58% from a year earlier. AMD itself expected overall Q4 to come in at $7.5 billion in revenue, plus or minus $300 million. Back in November, AMD announced that it was laying off 4% of its staff, or about 1,000 people. The gaming segment saw revenue of $563 million, down 58% from a year ago due to lower semi-custom revenue. That revenue mainly comes from sales from Xbox and PlayStation game console revenues. Embedded segment revenue of $923 million, down 13% from a year ago as customers continued to normalize inventory levels. For the first quarter of 2025, AMD expects revenue to be approximately $7.1 billion, plus or minus $300 million. At the mid-point of the revenue range, this represents year-over-year growth of approximately 30% and a sequential decline of approximately 7%. Non-GAAP gross margin is expected to be approximately 54%. "2024 was a transformative year for AMD as we delivered record annual revenue and strong earnings growth," said AMD CEO Lisa Su, in a statement. "Data Center segment annual revenue nearly doubled as Epyc processor adoption accelerated and we delivered more than $5 billion of AMD Instinct accelerator revenue. Looking into 2025, we see clear opportunities for continued growth based on the strength of our product portfolio and growing demand for high-performance and adaptive computing." "We closed 2024 with a strong fourth quarter, delivering record revenue up 24% year-over-year, and accelerated earnings expansion while investing aggressively in AI and innovation to position us for long-term growth and value creation," said AMD CFO Jean Hu, in a statement. As noted, AMD laid off about 1,000 of its 26,000 employees starting in November. That was about 4% of its staff. AMD's own layoffs come at a time when AMD has been soundly beating Intel in the x86 processor market. But AMD has also been second in the transition from graphics processing units (GPUs) to AI accelerators in competition with AI chip market giant Nvidia. But Mercury Research reports that AMD's Q4 share of processors against Intel is 34% now, up dramatically from years ago.

AMD CEO Lisa Su On DeepSeek's AI Disruption: 'Training And Inference With Less Infrastructure Is A Good Thing' -- But GPUs, Not ASICs, Will Still Power The Future Of AI Chips - NVIDIA (NASDAQ:NVDA), Advanced Micro Devices (NASDAQ:AMD)

Advanced Micro Devices Inc. AMD CEO Lisa Su has addressed DeepSeek's AI advancements and their potential impact on the semiconductor market. What Happened: During AMD's fourth-quarter earnings call on Tuesday, Su expressed optimism about the innovations in AI. "The fact that there are new ways to bring about training and inference capabilities with less infrastructure actually is a good thing because it allows us to continue to deploy AI compute in broader application spaces and drive more adoption," she stated. Su also reinforced AMD's commitment to open-source AI, noting that DeepSeek's success aligns with the industry's broader shift toward democratized AI models. See Also: Apple Watch Faces Are A Mess -- Series 10's Biggest Feature Is Limited To Just Four Faces, Frustrating Users Regarding the future of AI chips, Su stated that while application-specific integrated circuits (ASICs) are part of AMD's total addressable market, GPUs will continue to play a significant role due to their programmability and adaptability to evolving AI algorithms. "My belief is, given how much change there is still going on in AI algorithms, that ASICs will still be the smaller part of that TAM [Total Addressable Market] because it is a more specific workload-optimized solution," Su explained. "GPUs will enable significant programmability and adjustments to all of these algorithm changes." She noted that AMD's portfolio spans CPUs, GPUs, and ASICs, positioning the company as a comprehensive compute partner for diverse workloads. Subscribe to the Benzinga Tech Trends newsletter to get all the latest tech developments delivered to your inbox. Why It Matters: AMD's fourth-quarter report revealed revenue of $7.66 billion, surpassing analyst expectations of $7.53 billion. This performance underscores AMD's robust position in the semiconductor industry, particularly in the data center segment, which saw a 69% growth. The emergence of DeepSeek's low-cost AI assistant app from China has been a significant development in the AI landscape. DeepSeek says they spent only $5.6 million on semiconductor chips. That's about one-tenth of what companies like OpenAI and Meta have spent on chips for their AI apps. When the market realized that the same AI performance could be achieved with fewer and slower chips, it hit companies supplying expensive chips. On Jan. 27, Nvidia Corp.'s NVDA stock dropped 17%. In the days after the DeepSeek news, chip stocks and AI-focused companies saw a slight recovery. However, the damage isn't contained yet. The idea of a cheaper, equally effective way to build AI models still lingers. Price Action: AMD's stock fell 8.84% in after-hours trading, closing at $108.94. Earlier on Tuesday, it ended at $119.50, up 4.58%, according to Benzinga Pro data. Check out more of Benzinga's Consumer Tech coverage by following this link. Read Next: ChatGPT-Maker OpenAI's Future Hangs In The Balance As Judge Says Elon Musk's Lawsuit Will Partially Go To Trial Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors. Photo courtesy: Shutterstock AMDAdvanced Micro Devices Inc$108.94-4.66%Overview Rating:Speculative37.5%Technicals Analysis660100Financials Analysis200100WatchlistOverviewNVDANVIDIA Corp$118.750.08%Market News and Data brought to you by Benzinga APIs

AMD Posts Higher 4Q Revenue on Continued Data-Center Demand

Advanced Micro Devices' revenue climbed in the fourth quarter, driven by continued demand for its artificial-intelligence offerings. The Santa Clara, Calif., chip maker posted a profit of $482 million, or 29 cents a share, for its quarter ended Dec. 28, compared with $667 million, or 41 cents a share, a year earlier. Adjusted per-share earnings came in at $1.09, narrowly beating the $1.08 that analysts polled by FactSet were expecting. Revenue increased 24% to $7.67 billion. Analysts had modeled $7.53 billion. Sales across AMD's data center division, which includes its AI chips, jumped 69% to $3.9 billion. The company attributed the increase to the ramp of its Instinct chip. Its client, or personal-computing, revenue rose 58% to $2.3 billion. The gain was slightly offset by the company's gaming unit, where sales fell 59% to $563 million, and its embedded segment, down 13% to $923 million. Chief Executive Lisa Su said there are clear opportunities for the company to continue growing in 2025, citing its product portfolio and growing demand for high-performance and adaptive computing. For the current quarter, AMD guided for revenue between $6.8 billion and $7.4 billion, the midpoint of which beat the $7 billion that analysts surveyed by FactSet had forecast. The company has stood out as a winner in the AI craze, supplying chips used to create and deploy tools that produce human-like text, images and video. As part of a shift in AMD's broader business strategy towards AI, it said in November that it would reduce its global workforce by 4%, or about 1,040 jobs.

AMD reports profit beat, as data center sales nearly double for year

Advanced Micro Devices reported fourth-quarter results on Tuesday that beat Wall Street expectations for sales and earnings, but the company's important data center sales metric was light versus FactSet expectations. Shares fell 6% in extended trading. Here's how the chipmaker did, versus LSEG consensus estimates for the quarter ended Dec. 28: AMD said it expects $7.1 billion in sales in the first quarter, plus or minus $300 million. It projected its gross margin to be about 54%. Analysts expected AMD to guide for revenue of $7 billion AMD reported $482 in net income, or 29 cents per share, for the fourth quarter, down from $667 million, or 41 cents per share in the year-ago period. The company's most important unit is its business selling chips for data centers, which has been growing in recent quarters, thanks to demand for its graphics processing units for artificial intelligence. AMD reported $3.9 billion in data center sales, which was up 69% on a dear-over-year basis. The company said the increase was due to sales both in its Instinct GPUs and its EPYC CPUs, which compete with Intel's processors. However, analysts polled by FactSet were hoping for $4.14 billion in sales during the quarter. For the full year, AMD's data center division revenue increased 94% to $12.6 billion. AMD said that $5 billion of those sales were from its Instinct GPUs for AI. While AMD is far behind market leader Nvidia, it's released competitive data center GPUs in recent years that some big infrastructure buyers, including Meta and Amazon, have embraced. AMD categorizes its chips for PCs, laptops, and other individual computers as client revenue, which increased 58% on an annual basis to $2.3 billion. AMD said both its chips for desktops as well as mobile computers such as laptops are seeing strong demand. AMD is also the second-largest producer of GPUs for gaming, behind Nvidia. Revenue in the segment declined 59% to $563 million. The company's other small division, embedded chips, reported $923 million in sales, down 13% year-over-year.

AMD downplays DeepSeek's risk to Instinct GPU sales

Predicts more efficient ML architectures will drive adoption, see Instinct sales accelerate, shares dive AMD's chief exec Lisa Su has predicted the chip designer's Instinct accelerators will drive tens of billions of dollars in annual revenue in coming years, despite DeepSeek-inspired speculation that next-gen AI models may not need the same level of compute infrastructure used to produce such tools today. "Relative to DeepSeek, we think that innovation on the models and the algorithms is good for AI adoption," Su told analysts on Tuesday's Q4 earnings call, referring to the surprisingly capable made-in-China LLM family that was built on compute infrastructure so efficient - with fewer GPUs than one might expect - it has investors wondering if cutting-edge AI truly needs the billions in capex Silicon Valley demands. Or in other words, do organizations really need to spend so much on the likes of AMD, buying its AI accelerators and swelling its revenues, if DeepSeek shows you can do more with less? Isn't this a warning sign of a market correction? "The fact that there are new ways to bring about training and inference capabilities with less infrastructure is actually good," said Su, "because it allows us to continue to deploy AI compute in the broader application space and [with] more adoption." And speaking of adoption, Su expects Instinct revenues to increase significantly compared to the $5 billion-plus they brought in during the 2024 fiscal year. The CEO offered only that enthusiastic outlook and resisted committing to a revenue number. Su did, however, suggest that AMD's strongest growth would come in the second half of FY 2025 (which ends on December 28 and therefore all-but overlaps the calendar year) and be driven by shipments of its next-gen MI355X accelerators. Those chips were initially expected to ship toward the end of the second half. However, given the performance of early silicon and customer demand, Su said the chip designer now expects to ramp production toward the middle of the year. First teased during AMD's Advancing AI event last fall, the next-gen GPU will use the CDNA 4 architecture and boast dense floating point performance roughly on par with Nvidia's B200 accelerators while delivering 50 percent more memory at 288GB. Su also took the opportunity to tease AMD's next-gen MI400-series accelerators, which will apparently be offered in a rack-scale architecture. "The CDNA-Next architecture takes another major leap, enabling powerful rack-scale solutions that tightly integrate networking, CPU and GPU capabilities at the silicon level to support Instinct solutions at data center scale," she said. Su didn't go into much detail as to what these rack-scale systems will look like, but if we had to guess they'll be somewhat reminiscent of Nvidia's 120 kilowatt NVL72 systems we looked at last spring, only using Ultra Ethernet and UA Link rather than InfiniBand and NVLInk. AMD isn't the only one that's jumped on the rack scale bandwagon. Last week, Intel revealed its Jaguar Shores GPUs will also embrace the form factor -- assuming they ever make it out of the lab. On Tuesday's earnings call, Su also downplayed the threat of custom AI ASICs pose to AMD's GPU business. Custom silicon for AI workloads has become increasingly common among hyperscaler and cloud providers. In particular, Google and Amazon have now deployed large quantities of their respective tensor processing units (TPUs) and Trainium accelerators to support internal and external model development. Late last year, Amazon revealed plans to deploy more than 100,000 Trainium2 accelerators under Project Rainier for use by AI model builder Anthropic. Broadcom has told shareholders it sees a pipeline for millions of similar devices. Despite this, Su doesn't expect dedicated AI ASICs to replace GPUs any time soon. "I have always been a believer in you need the right compute for the right workload," she said. "Given the diversity of workloads, large models, medium models, small models, inference... broad foundation models or very-specific models, you're going to need all types of compute and that includes CPUs, GPUs, ASICs, and FPGAs." In total, Su expects these accelerators to eventually contribute to a total addressable market (TAM) of more than $500 billion. However, she notes that the AI algorithms behind the generative AI boom are still evolving. "My belief is, given how much change there is still going on in AI algorithms, that ASICs will still be the smaller part of that TAM [total addressable market]." How this mix will actually shake out remains to be seen, but it's clear from AMD's Q4 earnings the company has a lot riding on its Instinct accelerators, which accounted for roughly a fifth of its annual revenues. Looking back over the past four quarters, AMD profits nearly doubled during the 2024 fiscal year, surging 92 percent to $1.6 billion. Revenues, for the year, meanwhile were up 14 percent to $25.8 billion. Of that, $482 million in net income and $7.75 billion in revenues were realized during the fourth quarter. Unsurprisingly, AMD's datacenter division again accounted for the lion's share of the revenues, at $3.9 billion for the quarter, up 69 percent year on year. For the full year, datacenter sales totaled $12.6 billion, up 94 percent, of which Instinct GPUs made up $5 billion. AMD's client computing division won $2.3 billion in revenues in Q4, an increase of 58 percent compared to this time last year. AMD's gains in this arena aren't terribly surprising considering it recently refreshed both its mobile and desktop products. However, AMD's gaming and embedded divisions continued to struggle in the fourth quarter. Gaming revenues reached $563 million, down 59 percent year over year. Q4 is usually a good season for gaming revenue as high-powered PCs and consoles appear under Christmas trees. Executives pointed to the advanced age - five whole years! - of Sony's PlayStation and Microsoft's Xbox as a reason for poor performance, as console sales decline as they age meaning demand for the custom AMD processors they include diminishes. Su suggested the gaming and embedded segment could rebound in 2025 as AMD targets mainstream PC gamers with its Radeon 9000-series GPUs. AMD's embedded segment, which includes its FPGAs and Adaptive SoC family of products, also declined during the quarter, falling 13 percent year over year to $923 million. According to Su, market demand for FPGAs improved in the aerospace and defense spaces but remains weak among industrial and communications customers. Looking ahead to the first quarter, AMD is forecasting revenues of $7.1 billion give or take $300 million, an increase of about 30 percent compared to 2024, and a seven percent decline from the prior quarter. Speaking of which, AMD's share price dropped about nine percent in after-hours trading, largely due to those quarterly datacenter sales not reaching the $4.1 billion Wall Street had anticipated. ®

AMD CEO: Annual AI Chip Revenue To Reach Tens Of Billions In 'Coming Years'

With AMD finishing its 2024 fiscal year with more than $5 billion in revenue from its Instinct data center GPUs, the company's CEO, Lisa Su, says the company expects the AI chip segment to reach tens of billions of dollars in annual revenue in the 'coming years.' AMD CEO Lisa Su said the company expects its Instinct data center GPU revenue to reach tens of billions of dollars in annual revenue in the "coming years" after it generated more than $5 billion from the AI chip segment last year. Su made the comments during AMD's fourth-quarter earnings call on Thursday, where she also revealed that the company plans to start shipping its next-generation Instinct MI350 GPUs in the middle of the 2025, sooner than its original target window for the second half of the year. She added that AMD plans to start sampling the chips with customers by March. [Related: Intel Cancels Falcon Shores AI Chip To Focus On 'Rack-Scale Solution'] "The customer feedback on MI350 series has been strong, driving deeper and broader customer engagements with both existing and net new hyperscale customers in preparation for at-scale MI350 deployments," she said. AMD beat Wall Street's expectations for fourth-quarter revenue with $7.7 billion, which was 12 higher sequentially and a 24 percent increase from the same period. The two main drivers were its data center segment, which nearly doubled in sales again year over year to a record $3.9 billion thanks in part to a "strong ramp" of Instinct GPUs, and its client segment, which grew 52 percent year-over-year to a record $2.3 billion on the strength of its Ryzen chips. Touting AMD as the "only provider with the breadth of products and software expertise needed to power AI across servers, edge devices and PCs, Su said the company made "outstanding progress building the foundational product, technology and customer relationships needed to capture a meaningful portion of this market." "We believe this places AMD on a steep long-term growth trajectory, led by the rapid scaling of our data center AI franchise from more than $5 billion of revenue in 2024 to tens of billions of dollars of annual revenue over the coming year," she said. While AMD's $5 billion-plus of Instinct GPU revenue in 2024 is a fraction of the nearly $80 billion Nvidia made in data center revenue for the first three quarters of its recently completed fiscal year, the figure is nonetheless a significant increase from sales that were likely in the hundreds of millions in 2023 for the company's product line. Su said the company began volume production of its Instinct MI325X GPU in the fourth quarter of last year and touted "new customer wins" thanks to its "significant performance and [total cost of ownership] advantages compared to competitive offerings." The MI325X is the follow-up to AMD's Instinct MI300X that launched in late 2023 as the company's first significant competition to Nvidia's data center GPUs. "We have also made significant progress with the number of customers adopting AMD Instinct. For example, we recently closed several large wins with MI300X and MI325X at lighthouse AI customers that are deploying Instinct at scale across both their inferencing and training production environments for the first time," Su said. Among the customers adopting Instinct now are Meta, which uses the MI300X exclusively to power its 405-billion-parameter Llama model, and Microsoft, which uses the same GPU, to "power multiple GPT-4-based Copilot services" in addition to "flagship instances that scale up to thousands of GPUs for AI training and inference and HPC workloads." More than a dozen cloud service providers -- including IBM, Digital Ocean and Vultr -- use Instinct platforms for new instances, and Su said that number will grow this year. She added that more than 25 MI300 server designs are in production with the largest OEMs and ODMs. As for the MI350 series, Su said there's "very strong customer demand" for the GPU line, which is expected to boost AI performance by 35 times, the largest leap in the company's history. And by moving up the MI350 series' production ramp to the middle of this year, the move "improves our relative competitiveness," she added. "It's a more powerful GPU. [Average selling prices] go up, and you would expect larger deployments that include training and inference in that timeframe," Su said. Then in 2026, AMD plans to launch its MI400 series GPUs, which is expected to enable "powerful rack-scale solutions that tightly integrate networking, CPU and GPU capabilities at the silicon level to support Instinct solutions at data center scale," according to the CEO. "We see significant traction and excitement around what we can do there with rack-scale designs and just the innovation that's going on there," she said. While AMD's Instinct GPUs played a major role in the company's data center growth in the fourth quarter, it also cited an increase in sales of its EPYC server CPUs. "2024 marked another major inflection point for our server business as share gains accelerated driven by the ramp of 5th-Gen EPYC 'Turin' and strong double digit percentage year-over-year growth in 4th-Gen EPYC sales," Su said. This was driven by a 27 percent increase last year in EPYC-based cloud instances, which now amount to more than 1,000, over 100 of which were stood up in the fourth quarter alone. AMD also saw EPYC CPU sales grow in the "strong double-digit percentage" last year for on-premises enterprise deployments, with more than 450 EPYC-based server designs available from top OEMs and ODMs, more than 120 of which came online in the fourth quarter using the company's latest Turin processors from the likes of Dell Technologies, Lenovo and others. "We are seeing growing enterprise pull based on the expanding number of EPYC platforms available and our increased go-to-market investments," Su said. Growth in AMD's data center and client segments offset a 59 percent year-over-year decline in AMD's gaming segment, which made $563 million in the fourth quarter, and a 13 percent decrease in the company's embedded segment, which generated $923 million in the period. The company said it expects to make roughly $7.1 billion, plus or minus $300 million, in the first quarter of this year, which would represent a sequential decline of approximately 7 percent and a 30 percent increase from the same period last year. This is slightly above the average estimate of Wall Street analysts. AMD's stock price was down more than 8.5 percent in after-hours trading.

AMD downplays DeepSeek threat: '[Innovation is] good for AI adoption'

TL;DR: Despite a $1 trillion tech sector crash, AMD CEO Lisa Su and other industry leaders praise DeepSeek's AI efficiency, seeing it as a driver for broader AI adoption rather than a threat to hardware demand. While markets respond to the shift in demand created by Chinese AI company DeepSeek, AMD's CEO Lisa Su provided some comments on the state of hardware sales moving forward. "Relative to DeepSeek, we think that innovation on the models and the algorithms is good for AI adoption," she told analysts during Tuesday's Q4 earnings call. AMD's CEO Lisa Su (Credit: Reuters) Su welcomes the innovation, going on to state that she expects to see more AI compute deployment within the broader market. "The fact that there are new ways to bring about training and inference capabilities with less infrastructure is actually good," Credit: Shutterstock Fears are still lingering within the tech sector, with power, semiconductor and infrastructure companies exposed to a collective $1 trillion loss in market valuation as of last Tuesday. NVIDIA suffered the most from this crash, famously losing $600 billion in market valuation and 17% in stock price over a single day. AMD, however, has been somewhat resistant to the crash due to its relatively minor involvement in the AI sector. Since the DeepSeek R1 model launched on January 20th, AMD's stock price has decreased by just 2.3%, while NVIDIA is still down by approximately 15%. AMD's Instinct MI400 accelerator (Credit: AMD) Su also anticipates that AMD's next-gen Instinct accelerators will drive billions of dollars in annual revenue over the coming years, despite the speculation that less computing power will be required to produce next-gen AI models. Su was resistant to committing to a specific revenue figure for the accelerators. AMD's CEO is not the only major tech company to praise DeepSeek recently, with the chiefs of Apple, Meta, Microsoft, and Google each issuing statements in favor of the innovation. The common sentiment is that lowering the cost of artificial intelligence will be a net positive for the industry, with AI adoption only expected to increase. "First of all, I think, tremendous team," Google's Sundar Pichai said of DeepSeek. "I think they've done very, very good work." Even as AI hardware giants suffer historic losses, top executives from AMD to Google are praising DeepSeek's efficiency as a positive shift for the industry. Whether this optimism will translate into long-term gains remains the burning question.