The race to dominate artificial intelligence processing took a surprising turn as Advanced Micro Devices, a key challenger to Nvidia, delivered a forecast that left some investors wanting more.
While AMD’s first-quarter sales are projected to land around $9.8 billion – exceeding the average analyst estimate of $9.39 billion – the figure fell short of the more optimistic predictions exceeding $10 billion, triggering a dip in after-hours trading.
A boost in sales came from offloading older chip inventory to China, a strategic move tempered by reduced profit margins. Like Nvidia, AMD navigates complex trade restrictions impacting access to the world’s largest chip market.
Despite the tempered outlook, AMD’s fourth-quarter performance revealed significant growth, with sales surging 34% to $10.3 billion and earnings reaching $1.53 per share – both figures surpassing analyst expectations.
The company’s data center division, fueled by the AI boom, led the charge with a 39% increase to $5.38 billion in revenue, demonstrating a clear shift towards AI-driven demand. Even PC-related sales saw a healthy 34% jump.
CEO Lisa Su remains confident, reiterating a bold prediction of tens of billions of dollars in AI revenue by 2027. She addressed concerns about potential component shortages, assuring analysts that supply chains are being bolstered to meet escalating orders.
Major deals with industry giants like OpenAI and Oracle are poised to unlock substantial revenue streams, though investors are eager for a clearer timeline on when these gains will materialize. These partnerships signal growing confidence in AMD’s MI series AI accelerators.
Analysts acknowledge a reliance on a limited number of key customers, raising concerns about potential vulnerability to Nvidia’s competitive pressure. The possibility of clients shifting allegiance remains a point of scrutiny.
Interestingly, AMD appears to be capitalizing on Intel’s recent struggles, steadily gaining ground in the market for graphic chips and central processing units used in both personal computers and servers. This shift in momentum is being closely watched by industry observers.
The current landscape highlights the intense competition and rapid evolution within the AI processor market, where even strong performance can be met with heightened expectations and a demand for accelerated growth.
