- AMD reported disappointing data center results, missing analysts' expectations despite overall revenue exceeding estimates. While Q4 data center sales rose 69% YoY to $3.86 billion, they fell short of the $4.09 billion forecast, sending shares down 3%. The company projected Q1 revenue between $6.8B and $7.4B, above the $7.04B consensus. However, concerns about AMD's AI momentum intensified after Chinese startup DeepSeek introduced a cheaper AI model, raising fears that Nvidia’s dominance remains unchallenged.
- Q4 revenue grew 24% to $7.66 billion, with EPS of $1.09, in line with expectations. Despite generating $5B annually from AI chips, AMD lags far behind Nvidia’s $100B+ in the segment. AI-related stocks, including AMD and Nvidia, fell on concerns that massive hardware investments may not be necessary. AMD’s gaming chip revenue plunged 59% to $563M, as Microsoft and Sony consoles near the end of their cycle, further weighing on growth.
Why it matters
AMD's weaker-than-expected data center growth and rising AI competition from China raise concerns about its ability to challenge Nvidia, impacting its stock outlook and broader AI market sentiment.
