AMD Prepares for Earnings Amidst Global Market Turbulence

Advanced Micro Devices (AMD) is scheduled to release its fourth-quarter financial results on Tuesday following the implementation of President Trump's 10% tariffs on Chinese goods and the recent emergence of DeepSeek, a Chinese AI startup.

Earnings Outlook

Analysts estimate AMD to report earnings per share of $1.09 on revenue of $7.5 billion for the quarter. The company's Data Center segment, the largest revenue contributor, is projected to generate $4.09 billion, a significant increase from the $2.28 billion reported in the previous year's quarter.

The Client segment, including PC chips, is expected to contribute $1.98 billion, outperforming the $1.36 billion from Q4 2023. In contrast, Gaming revenue is predicted to decline to $487 million from $1.36 billion.

Market Impact

Trump's tariffs on Chinese goods are anticipated to affect the broader electronics market, including servers and PCs manufactured in China. This could potentially dampen sales for chip manufacturers like AMD if consumers and businesses are deterred by higher prices.

Additionally, the emergence of DeepSeek as a formidable competitor in the AI market has raised concerns among investors and analysts. DeepSeek's AI model, comparable to those from Silicon Valley, but offered at a lower cost, has led to a decline in AI chipmaker stocks, including AMD.

Investor Focus

During AMD's earnings call, investors are expected to monitor the company's response to the global market conditions and its plans to address the challenge posed by DeepSeek. The impact of Trump's tariffs and the potential for additional tariffs on semiconductors will be closely scrutinized.