AMD shares fall to its worst loss in nearly a decade as AI concerns linger

Advanced Micro Devices Inc. saw its biggest stock loss in over nine years after the chipmaker’s sales forecast failed to impress investors, indicating that it is not making the AI breakthroughs that Wall Street had expected.

According to a statement released by the firm on Tuesday, first-quarter sales will be around $9.8 billion, with a $300 million margin of error.

AMD reported some sales of older processors in China, which is a mixed blessing. Although it increased revenue and showed that the business was negotiating trade regulations, it hurt profit margins.

Investors who had anticipated a greater return on their investment in artificial intelligence were disappointed by the forecast. In this lucrative industry, AMD is still catching up to Nvidia Corp., but the chipmaker claims that a new, more powerful architecture that will be released in the second half of the year would give it an advantage.

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The shares dropped 17% to $200.19 on Wednesday, the largest one-day drop since May 2017. By Tuesday’s end, they had increased 13% this year.

In keeping with her typical optimistic outlook, CEO Lisa Su reiterated her forecast that the company’s AI revenue will reach tens of billions of dollars by 2027.

Sales during the fourth quarter increased 34% to $10.3 billion, exceeding the average estimate of $9.7 billion. With some items subtracted, the profit per share was $1.53. Using data provided by Bloomberg, analysts predicted an average of $1.32.

The primary driver of AI spending, AMD’s data center division, increased 39% to $5.38 billion over that time. On average, analysts had projected $4.97 billion. Sales of personal computers increased 34% to $3.1 billion. $2.89 billion was the average forecast.

Similar to Nvidia, AMD faces US limitations on its exports to China, the largest chip market in the world. Although President Donald Trump recently took action to loosen restrictions, obtaining the necessary permits from the Department of Commerce has taken some time.

Shipments of older-generation MI308 chips to Chinese clients brought in $390 million for the company last quarter. It anticipates around $100 million in these sales within the present time frame; the decline is indicative of waning demand for an increasingly antiquated product.

Although AMD still lacks the necessary permits, it hopes to sell its more recent MI325 processor in China. The business stated that it is still talking about the matter with Washington and potential Chinese clients.

More generally, AMD anticipates tens of billions of dollars in additional income from massive agreements with OpenAI and Oracle Corp. as well as from the general market for AI equipment. Executives have been under pressure from investors and analysts to provide more accurate estimates of when that will occur.