
AMD’s stock fell nearly 4% in after-hours trading despite a 40% gain earlier this year, as CEO Dr. Lisa Su cited U.S. export curbs and the ongoing transition to MI350 chips for the subdued AI revenue performance
Semiconductor giant AMD has reported weaker-than-expected growth in its data center segment for the second quarter, falling short of investor hopes despite the ongoing surge in demand for AI chips.
While AMD’s overall revenue for the quarter stood at $7.69 billion with an adjusted profit of 48 cents per share, it was the company’s data center business — which includes AI chips and server processors — that drew the most scrutiny. The segment posted $3.2 billion in revenue, reflecting a 14% year-on-year increase, narrowly meeting market expectations. In contrast, rival Nvidia saw its data center revenue soar by 73% during the same period, driven by high demand for its Blackwell GPU systems.
AMD’s stock dipped approximately 4% in after-hours trading following the earnings announcement. The company’s shares had previously surged more than 40% this year, buoyed by optimism around its AI capabilities.
CEO Dr. Lisa Su attributed the modest AI chip performance to U.S. export restrictions affecting sales to China, alongside AMD’s transition to its next-generation MI350 series chips. However, she noted that volume production of the MI350 began ahead of schedule in June, with a significant ramp-up expected in the latter half of 2025.
AMD faces competitive pressure
The AI chip market continues to experience intense competition, particularly as tech giants such as Microsoft and Meta increase their capital spending to fuel AI initiatives. Meta recently raised its capex forecast to as much as $72 billion, while Microsoft projected a record $30 billion spend in its current fiscal quarter. Despite this, AMD has struggled to capture the same momentum as Nvidia.
Analysts remain watchful. “Data center performance is key for AMD valuation,” said Dan Morgan, portfolio manager at Synovus Trust. “This quarter’s results were modest, especially in comparison to competitors.”
For the third quarter, AMD forecast revenue of approximately $8.7 billion, plus or minus $300 million, and an adjusted gross margin of 54%. This guidance does not include potential income from shipments of the MI308 AI chip to China, which are currently under review by the U.S. Department of Commerce due to export licensing requirements introduced earlier this year.
AMD had previously warned that the China export curbs could impact its annual revenue by up to $1.5 billion, largely hitting the second and third quarters. The company said it plans to resume shipments once appropriate licenses are approved.
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