AMD reports solid Q4 results but shares tumble on data center sales guide

Investing.com-- Advanced Micro Devices Inc (NASDAQ:AMD) reported better-than-expected fourth-quarter earnings and revenue, but its shares fell over 9% in premarket trading Wednesday after the chipmaker forecasted a decline in data center sales for the current quarter.

In Q4, the chipmaker's robust performance was fueled by accelerating adoption of its EPYC processors and strong demand for AI computing solutions.

AMD posted adjusted earnings per share (EPS) of $1.09, edging past the analyst estimate of $1.08. Revenue for the quarter reached a record $7.7 billion, surpassing the consensus forecast of $7.54 billion and marking a 24% increase YoY.

The company's Data Center segment was a standout performer, with annual revenue nearly doubling as EPYC processor adoption accelerated.

"2024 was a transformative year for AMD as we delivered record annual revenue and strong earnings growth," said AMD Chair and CEO Dr. Lisa Su. "Data Center segment annual revenue nearly doubled as EPYC processor adoption accelerated and we delivered more than $5 billion of AMD Instinct accelerator revenue."

For the first quarter of 2025, AMD forecasts revenue between $6.8 billion and $7.4 billion, with the midpoint of $7.1 billion slightly above the analyst consensus of $7.04 billion.

The company's full-year 2024 results were equally impressive, with record revenue of $25.8 billion and non-GAAP gross margin reaching a record 53%.

During a call with analysts, Su stated that the company's data center revenue for the current quarter is projected to decline by approximately 7% compared to the quarter that just ended. This aligns with AMD’s broader expectations for a drop in overall revenue.

Su did not provide a specific forecast for AI chip sales, but she said that AMD anticipates generating "tens of billions" of dollars in revenue "in the next couple of years."

Bank of America (NYSE:BAC) reiterated a Neutral rating on AMD shares following the report, arguing that the chipmaker "has not (yet) managed to articulate how it can carve an important niche versus NVDA’s dominance and custom ASIC chip’s growing importance in AI silicon." The bank's analysts added that "any upside surprise [is] largely dependent on share gains against Intel (NASDAQ:INTC) in more mature markets."

Analysts at Stifel were somewhat more optimistic in their post-earnings comments, noting they "continue to see AMD as well positioned for AI compute."

"It is likely, in our view, that some customers are waiting for 325/350 systems, which should drive a much stronger second half," analysts led by Ruben Roy said.

This article first appeared in Investing.com