AMD’s AI push gathers pace behind Nvidia
Advanced Micro Devices (AMD) delivered another quarter of rapid growth, beating Wall Street forecasts on both revenue and earnings. Yet its shares tumbled as investors weighed what the numbers mean in a market still dominated by chip giant Nvidia.
The chipmaker reported fourth quarter revenue of $10.27bn (£7.49bn), up 34 per cent year on year, while adjusted earnings per share rose 40 per cent to $1.53.
Data centre revenue climbed 39 per cent to $5.38bn, driven by demand for AI accelerators, while PC and notebook sales rose 34 per cent. Elsewhere, gaming revenue jumped 50 per cent.
Despite the firm’s headline growth, the market reaction was cautious, with shares sliding in after-hours trading. While stock remained under pressure in early European trading, it was a sign of just how tightly AMD is benchmarked against its biggest rival.
Trailing behind Nvidia
AMD remains the clear number two in advanced chips, but that gap to the market leader still frames investor expectations.
Emarketer analyst Gadjo Sevilla said the company is “growing faster and is financially healthier than Intel, but lacks Nvidia’s sheer scale and AI dominance”.
At CES earlier this year, AMD outlined its next phase of expansion, previewing its new AI platform and launching a new GPU. The strategy reflects a push beyond a single product line.
That diversification is a key difference with Jensen Huang’s company, which remains squarely focused on GPUs, and Intel, which continues to manage the costs and complexities of its own manufacturing.
AMD’s model gives it more margin flexibility, though it also means relying on external foundries.
Ben Barringer, head of tech research at Quilter Cheviot, said: “AMD delivered a good set of results, with revenues up 36 per cent, but it has been punished for not knocking it out of the park”.
“Importantly, AMD has taken further share from Intel, particularly in the PC and data centre markets”.
Barringer added that AMD’s next-generation chips, due later this year, could strengthen its role as a second source for AI hardware.
Challenging Nvidia is “easier said than done”, he added, but the firm “could easily become a second source for chips”.
China and regulation
Geopolitical headwinds continue to constrain the market.
Chief executive Lisa Su has announced that AMD expects no additional revenue from China beyond the $100m expected in its first quarter, citing uncertainty around US export licences for advanced chips.
Recent sales were linked to previously approved licences, so should not be seen as a sign of renewed momentum in the region.
Her caution fed into the firm’s guidance, with AMD forecasting first-quarter revenue of $9.5bn to $10.1bn, comfortably ahead of analysts’ averages but below the most optimistic market projections.