Advanced Micro Devices (AMD) experienced a notable 17% stock decline on Wednesday, following the release of its first-quarter revenue forecast, which some analysts deemed less robust than anticipated. The chipmaker reported fourth-quarter revenue of $10.27 billion, surpassing LSEG consensus estimates of $9.67 billion.
For the first quarter, AMD projected revenue to be around $9.8 billion, with a $300 million margin of error, exceeding the consensus expectation of $9.38 billion. However, the market had seemingly priced in a more aggressive outlook from AMD, particularly given the ongoing surge in demand for processors powering artificial intelligence applications. AMD, alongside industry leader Nvidia, is a pivotal player in the AI chip market, and its stock has seen an impressive surge of over 100% in the past year, driven by this escalating demand.
Analysts noted that while expectations for AMD were particularly high, the company’s disclosure of significant Chinese revenue in the quarter, which was not factored into prevailing analyst estimates, may have tempered the perceived strength of its beat. “First, expectations were pretty sky high,” commented Chris Rolland, an analyst at Susquehanna. “Secondly, they announced they shipped Chinese revenue in the quarter that was unexpected. This was not in Street numbers, so when you account for that, the beat was far less substantial than we would’ve thought.”
Despite this, Rolland also highlighted that demand for AMD’s chips in data centers remains strong. The company has also been strategically positioning itself for future growth through significant partnerships. Notably, AMD inked a deal with OpenAI in October, which could involve OpenAI deploying 6 gigawatts of AMD’s Instinct graphics processing units over multiple years, starting with an initial 1-gigawatt rollout in the latter half of 2026. Furthermore, Oracle announced in October its intention to deploy 50,000 AMD AI chips as a significant alternative to Nvidia’s offerings, beginning later this year. These large-scale deployments underscore the increasing adoption of AMD’s technology in critical AI infrastructure.
The performance of AMD’s stock reflects the intense competition and high growth expectations within the AI semiconductor sector. While the company’s most recent guidance may have fallen short of some of the most optimistic projections, its strategic partnerships and ongoing demand in key markets suggest a continued trajectory of growth, albeit with potential for market recalibration around more grounded expectations. The industry’s focus now shifts to AMD’s execution and its ability to capture an increasing share of the burgeoning AI compute market.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/17021.html
