Investors are betting big on the company after blockbuster deals with OpenAI and Oracle
(San Francisco) Advanced Micro Devices (AMD), Nvidia’s main competitor in the artificial intelligence (AI) chip market, failed to impress investors with its earnings forecast after an eye-popping rally soared expectations.
The company announced on Tuesday (November 4) that its fourth quarter revenue would be approximately US$9.6 billion. Analysts had expected an average of US$9.2 billion, with some forecasts as high as US$9.9 billion.
Investors are betting big on AMD following blockbuster deals with OpenAI and Oracle, which plan to use the company’s chips to build AI computing. It is expected that AMD will finally be able to break Nvidia’s dominance in the AI processor market.
But Wednesday’s outlook suggests that AMD’s profits may be slower than some expected.
The stock price fell about 3% in extended trading after the announcement. AMD stock more than doubled this year heading into its earnings release, closing Tuesday at $250.05.
Third-quarter sales rose 36% to $9.3 billion, beating the average estimate of $8.7 billion. Earnings were US$1.20 per share, excluding certain items. Analysts had expected an average of $1.17, according to data compiled by Bloomberg.
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Data center revenue for the same period increased 22% to US$4.3 billion. Analysts’ average estimate was $4.14 billion. Personal computer (PC) related sales increased 73% to $4 billion. The average forecast was USD 2.6 billion.
In a statement, CEO Lisa Su said the numbers mark “clear progress in our growth trajectory” as AMD looks to AI to drive revenue and profit growth.
AMD’s recent agreements with OpenAI, Oracle, and the US Department of Energy reflect growing interest in the company’s MI series of AI accelerators. These products, which work with Nvidia’s chips, are used to create and run AI services in data centers.
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AMD is also one of the largest providers of graphics chips and central processing units used in PCs and servers. Rival Intel last month pointed to strong demand for new AI-enabled laptops and enterprise servers. AMD continues to steal market share from its longtime rival in these key areas.
But like NVIDIA, AMD is also caught up in the growing conflict between China and the United States. The US government has placed restrictions on shipping the most powerful AI accelerators to Asian countries, citing security concerns. Semiconductor manufacturers have been lobbying for deregulation, arguing that expanding their operations in China will strengthen the United States.
Recent talks between US President Donald Trump and Chinese President Xi Jinping raised hopes that some restrictions would be lifted, but the impasse has not been resolved. At the same time, the Chinese government is encouraging local companies to rely on domestically produced alternatives.
AMD previously warned that China’s export restrictions would cost it US$1.5 billion in revenue this year. The company announced Tuesday that its third-quarter results do not include revenue from MI308 chips shipped to China.
AMD is the second-largest provider of graphics chips that form the basis of AI accelerators running in data centers. Meanwhile, the company’s microprocessors compete directly with Intel products in PCs and servers. bloomberg
