AMD shares drop after CEO predicts decline in data center sales

AMD shares drop after CEO predicts decline in data center sales

Shares of Advanced Micro Devices (AMD), based in Santa Clara, California, fell by roughly 10% in after-hours trading. This decline follows a drop of about 18% in AMD's stock value over the previous year, contrasting with Nvidia’s growth of over 171%. AMD has been striving to capture more of the AI processor market, which is primarily dominated by Nvidia, serving large tech clients such as Amazon and Microsoft.

Despite surpassing analyst expectations for its quarterly results and revenue outlook, AMD’s performance failed to impress investors who were hoping for more progress in the battle against AI giant Nvidia.

In the fourth quarter, AMD reported data center revenue of $3.9 billion, which fell short of the consensus estimate of $4.15 billion. The data center division represents AMD’s AI-related revenue, as it includes processors competing with Nvidia's chips.

For 2024, AMD reported generating over $5 billion from AI chip sales.

During a conference call, AMD's CEO, Lisa Su, revealed that the company expects a 7% decline in data center sales for the current quarter. This forecast aligns with a broader expected drop in AMD's revenue. Su did not provide specific figures for AI chip sales but stated that the company anticipates "tens of billions" of dollars in AI chip sales over the next few years.

Analyst Kinngai Chan of Summit Insight noted that AMD's AI GPU offerings are not meeting investor expectations and suggested that Nvidia is pulling ahead in the AI GPU race.

AMD's forecast comes as major tech companies like Microsoft and Meta are increasingly investing in developing their own custom AI chips for handling the data-heavy demands of generative AI. Microsoft and Meta introduced new AI chips last year, raising questions about AMD’s ability to compete in the evolving AI infrastructure space.

In contrast to AMD and Nvidia’s off-the-shelf processors, companies like Marvell and Broadcom are helping businesses design their custom chips for AI workloads. Su mentioned that AMD is also working closely with customers to create custom AI chips, competing with Marvell and Broadcom in this space.

Despite AMD's efforts, Nvidia retains a dominant 80% share of the AI chip market, partly due to its proprietary CUDA software, which is the industry standard among developers. As a result, switching from Nvidia to AMD is expensive for customers because of compatibility issues with CUDA-optimized code.

AMD expects first-quarter revenue of approximately $7.1 billion, plus or minus $300 million, exceeding analysts' average estimate of $6.99 billion. Additionally, AMD is poised to benefit from increased demand for personal computers capable of handling generative AI tasks, following a period of slow sales.

In its fourth-quarter results, AMD reported adjusted earnings of $1.09 per share, slightly exceeding the consensus estimate of $1.08. Revenue for the fourth quarter increased by 24% to $7.66 billion, surpassing the $7.53 billion estimate.

Tags;

demure,
demure trend,
very demure trend,
give me my money trend,
just give me my money trend,
what is demure trend,
what is the demure trend,
demure meaning,
demure trend meaning,
bta trend,
i love your daughter trend,
gimme my money trend,
nice try diddy trend,
legging legs trend,
hey brother trend,
who started the demure trend,
what is the very demure trend,
where did the demure trend come from,