On February 4, Advanced Micro Devices disappointed investors who were anticipating a stronger performance against AI leader Nvidia. Despite surpassing analysts' expectations with its quarterly results and revenue outlook, the Santa Clara, California-based chipmaker's shares plummeted around 10% in after-hours trading. Unlike Nvidia, AMD's shares declined approximately 18% last year.
AMD has been striving to capture more of the market for advanced AI processors dominated by Nvidia, particularly among major tech clients like Amazon and Microsoft. Despite reporting data center revenue of $3.9 billion for the fourth quarter, which was slightly below the expected $4.15 billion, AMD remains focused on its data center segment as a significant revenue source for its AI chips to compete with Nvidia.
CEO Lisa Su mentioned during an analyst conference call that the company expects a minimal decline in data center sales in the upcoming quarter. While declining to provide a specific forecast for AI chip sales, Su expressed confidence in achieving significant sales in the coming years.
Analyst Kinngai Chan from Summit Insight commented that AMD's AI GPU may not be meeting investor expectations, noting Nvidia's continued advancement in AI GPU performance and value, further solidifying its market dominance over AMD.
As tech giants like Microsoft and Meta invest heavily in developing their custom silicon to support AI applications, AMD faces increased competition. Su explained that AMD is actively engaging with customers to develop custom AI chips to better compete with companies like Marvell and Broadcom.
Despite these challenges, AMD is optimistic about its first-quarter revenue forecast, expected to reach around $7.1 billion. The company also foresees benefits from growing demand for PCs capable of handling generative AI tasks, following a period of sluggish sales.
In the fourth quarter, AMD reported an adjusted per-share profit of $1.09 and revenue of $7.66 billion, representing a 24% increase. These figures slightly outperformed analysts' estimates, positioning AMD for continued growth in the competitive semiconductor market.