AMD Earnings Beat Expectations, But Stock Dips After Hours
Advanced Micro Devices (AMD) reported its fourth-quarter earnings after Tuesday's closing bell, exceeding analysts' expectations on both the top and bottom lines. The chipmaker also provided a better-than-anticipated forecast for Q1.
Despite the positive earnings report and outlook, AMD's stock fell over 3.5% in after-hours trading. AMD is competing with Nvidia (NVDA) for market share in the AI space, where Nvidia dominates high-powered AI chip sales. The company is also facing a continued slowdown in PC sales despite efforts to push consumers and enterprises towards AI PCs.
For the quarter, AMD reported earnings per share (EPS) of $1.09 on revenue of $7.56 billion. Wall Street analysts had anticipated EPS of $1.09 and revenue of $7.5 billion. The company's data center business, its largest segment by revenue, generated $3.9 billion, slightly below expectations of $4.09 billion. AMD's client segment, which includes chips for PCs, brought in $2.3 billion, exceeding analysts' estimates of $1.98 billion. Gaming revenue reached $563 million, surpassing Wall Street's forecast of $487 million.
For the current quarter, AMD predicts revenue between $6.8 billion and $7.4 billion, slightly below analysts' estimates of $7.0 billion. Over the past 12 months, AMD shares have underperformed, declining by 33%, compared to Nvidia's 80% gain. However, AMD has outperformed Intel (INTC), which has witnessed a 54% decline in share value during the same period.
While President Trump's tariffs on Chinese-made goods may not significantly impact the high-end chip market, the broader market for electronics, including servers and PCs, is likely to be affected. If higher prices deter businesses and consumers from purchasing these systems and devices, chip manufacturers like AMD could experience slower sales.