Advanced Micro Devices (AMD) has once again demonstrated its resilience in the highly competitive semiconductor market, reporting fourth-quarter earnings that surpassed analyst expectations. However, the company’s forward-looking guidance for the first quarter has tempered some of the initial optimism, particularly in the context of an ongoing artificial intelligence spending surge.
The chipmaker’s stock experienced a notable dip, trading down as much as 8% in after-hours activity following the announcement.
For the final quarter of the fiscal year, AMD reported:
* **Earnings Per Share (EPS):** $1.53, exceeding the consensus estimate of $1.32.
* **Revenue:** $10.27 billion, comfortably beating the projected $9.67 billion.
Looking ahead to the first quarter, AMD anticipates revenue in the range of $9.8 billion, with a potential variance of $300 million, against market expectations of $9.38 billion. While this guidance represents growth, some industry observers had anticipated a more robust outlook, given the sustained high demand for AI-enabling hardware.
The company’s net income saw a significant year-over-year increase, climbing to $1.51 billion, or 92 cents per share, compared to $482 million, or 29 cents per share, in the prior year period. Overall revenue for the quarter marked a substantial 34% uplift on an annual basis.
AMD is strategically positioned as one of the key players in the high-performance graphics processing unit (GPU) market essential for AI workloads, though it currently holds a smaller market share compared to dominant competitor Nvidia. The company’s stock has seen impressive gains over the past year, more than doubling in value, reflecting investor confidence in its AI ambitions.
Recent announcements of significant customer wins, including deals with OpenAI, the developer behind ChatGPT, and Oracle, signal AMD’s growing traction in the AI sector. The company is set to launch its integrated server-scale AI system, codenamed Helios, later this year. During the earnings call, AMD CEO Lisa Su indicated that the company is engaged in “active discussions” for further sales of Helios and its MI450 chips.
“The ramp is on schedule to begin in the second half of the year, and the MI450 is performing exceptionally well,” Su stated.
These sales are a significant contributor to AMD’s data center segment, which posted $5.4 billion in revenue for the quarter, representing a 39% annual increase. This growth was attributed to robust demand for both the company’s central processing units (CPUs) and its AI-focused GPUs.
Su further elaborated on the earnings call that the burgeoning AI market is not only driving demand for AMD’s GPUs but also for its server CPUs.
“Server CPU demand remains exceptionally strong,” Su commented. “Hyperscalers are actively expanding their infrastructure to accommodate the escalating demand for cloud services driven by AI, while enterprises are modernizing their data centers to ensure they possess the necessary compute power for new AI workflows.”
Beyond its data center operations, AMD’s client and gaming segment experienced a healthy 37% year-over-year growth, reaching $3.9 billion. This surge was fueled by strong demand for AMD’s Ryzen processors in the laptop and PC markets, where the company has successfully gained market share against rivals like Intel.
The embedded systems segment showed more modest growth, increasing by 3% annually to $950 million.
Navigating the complexities of U.S. export controls, AMD has addressed concerns regarding chip shipments to China. The company confirmed that it recorded $390 million in sales of its Instinct MI308 chips in China during the fourth quarter and anticipates approximately $100 million in revenue from the region in the current quarter. This indicates a careful balance between regulatory compliance and market engagement.
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