AMD Stock Falls 5% After Earnings Miss and China Concerns

AMD stock fell more than 5% after the company reported lower-than-expected earnings and raised concerns about its AI chip business in China.

For the latest business and market news, visit InTime Sky News.

AMD Misses Earnings Expectations

The Santa Clara-based chipmaker posted adjusted earnings of 48 cents per share, slightly below analyst estimates of 49 cents per share.

CEO Lisa Su highlighted the impact of U.S. export restrictions on AI chips during a call with analysts.

“AI business revenue declined year over year as U.S. export restrictions effectively eliminated MI308 sales to China,” Su said.

Despite the setback, AMD announced a revenue forecast of $8.7 billion for the current quarter, plus or minus $300 million. Analysts had expected $8.3 billion. This guidance excludes potential revenue from AMD’s MI308 AI chip for China, designed to comply with U.S. regulations.

China AI Chip Shipments Under Scrutiny

Lisa Su told CNBC that AMD is working with the U.S. government on licensing requirements to resume shipments to China. However, she stressed a cautious approach:

“We think we have an extremely strong portfolio. Tens of billions of dollars is the opportunity in a $500 billion market.”

Earlier this year, AMD projected an $800 million loss in the second quarter due to chip restrictions. Although shipments could restart soon, analysts remain skeptical about the timing.

Analyst Concerns

• Morgan Stanley: Called the timeline for China shipments “vague.”

• Bernstein: Warned of inventory risks and rising operating expenses.

• Goldman Sachs: Expressed caution over AMD’s ability to scale its data center GPU business.

Data Center Growth and Market Outlook

Despite the earnings miss, AMD reported strong growth in its data center business, which rose 14% to $3.2 billion. This segment includes CPUs and GPUs, crucial for AI and cloud computing.

However, some analysts warned that high operating expenses could limit profitability. Goldman Sachs noted that AMD’s significant investment in software and system support could weigh on margins.

Lisa Su remains optimistic:

“The data center business is the main driver of our growth, and we see an inflection point in Q3.”

Strong Yearly Growth Despite Stock Drop

Even with the 5% post-earnings decline, AMD’s quarterly revenue rose 32% year over year to $7.69 billion, beating analyst expectations of $7.42 billion. Net income surged to $872 million (54 cents per share), up from $265 million (16 cents per share) a year earlier.

For more financial news and market insights, visit InTime Sky News.