AMD forecast quarterly revenue above Wall Street estimates on Tuesday, banking on strong demand for its chips from massive data-centre capacity expansions to power AI technologies.
Yet, its shares fell more than 7 per cent in extended trading, suggesting that investors were looking for an even stronger outlook after the stock more than doubled this year spurred on by AI optimism.
“AMD is now in a similar position to Nvidia NVDA-Q and the hyperscalers, where investors are looking for evidence that AI infrastructure investments will continue translating into accelerating returns,” said Jacob Bourne, an analyst at Emarketer.
The Santa Clara, California-based company is regarded as chip giant Nvidia’s closest rival in the market for graphics processing units, as major technology companies and governments worldwide ramp up spending on AI infrastructure.
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It has stepped up its AI product launches and moved beyond selling individual chips to offering AI systems that combine processors, networking gear and related hardware, giving customers an integrated AI infrastructure option and allowing it to better rival Nvidia’s rack-scale offerings.
AMD expects third-quarter revenue of about US$13-billion, plus or minus US$300-million, while analysts estimate US$12.52-billion, according to data compiled by LSEG.
Its expects adjusted gross margin to be about 56 per cent, largely in line with estimates.
The forecast suggests that AMD’s multi-billion dollar investments to challenge chip giant Nvidia’s dominance in the market for AI chips are beginning to pay off, with sales of its data-centre processors accelerating sharply.
While GPUs dominate heavy AI training, AMD is also benefiting from growing demand for central processing units, which are used alongside pricey graphics processors in servers. This has helped AMD capture market share from Intel.
AMD’s second-quarter revenue jumped 50 per cent to US$11.54-billion, beating the estimate of US$11.28-billion. Data-centre revenue more than doubled to US$6.72-billion, also exceeding expectations of US$6.48-billion.
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Adjusted profit of US$1.66 per share surpassed the estimated US$1.62.
At AMD’s AI event in July, CEO Lisa Su said the company’s second-generation Helios AI servers, featuring the MI455X AI accelerator and “Venice” processor made by TSMC, are in full production and would begin shipping in the coming months.
Supply, however, is constrained by AMD’s reliance on TSMC , the world’s largest contract chipmaker, where tight advanced packaging capacity continues to be a key hurdle.
AMD has also secured major customers and infrastructure agreements in recent months, as it races to expand its AI business.
About two weeks ago, it agreed to sell Anthropic tens of billions of dollars worth of AI servers powered by up to two gigawatts of MI450 chips from early 2027, and invest up to US$5-billion in the IPO-bound Claude maker, contingent on deployment milestones.
The company has also locked in up to 2.5 GW of data centre capacity through a deal with Core Scientific, while gaining warrants to purchase the company’s stock.
AMD’s client and gaming segment, which caters to consumer hardware, saw sales of US$3.84-billion in the second quarter, above estimates of US$3.78-billion.
Analysts have said weakness in the PC market, memory supply constraints and rising memory costs could weigh on demand and margins
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