AMD's AI-Powered Revenue Forecast Fails to Wow Investors
Shares of the chipmaker fell nearly 9% in extended trading despite a third-quarter revenue forecast of about US$13 billion that topped analyst estimates.
AMD's shares fell nearly 9% in extended trading after its AI-powered revenue forecast failed to impress investors, who were looking for an even stronger outlook following a stock that has more than doubled this year on AI optimism.
"AMD is now in a similar position to Nvidia and the hyperscalers, where investors are looking for evidence that AI infrastructure investments will continue translating into accelerating returns," said Emarketer analyst Jacob Bourne.
The Santa Clara, California-based company is regarded as Nvidia's closest rival in the market for graphics processing units, as major technology companies and governments worldwide ramp up spending on AI infrastructure.
AMD expects third-quarter revenue of about US$13 billion, plus or minus US$300 million, against analyst estimates of US$12.52 billion, according to LSEG data. Its expected adjusted gross margin is about 56%, largely in line with estimates.
On a post-earnings conference call, CEO Lisa Su said the company expects data-centre sales to more than double in 2027, and forecast total revenue growth above its more than 35% target and annual earnings above its US$20-per-share goal set at its 2025 analyst day.
Quarterly data centre revenue more than doubled to US$6.72 billion, beating expectations of US$6.48 billion and growing 16.3% sequentially from US$5.78 billion in the first quarter. Second-quarter revenue jumped 50% to US$11.54 billion, above the US$11.28 billion estimate, while adjusted profit of US$1.66 per share surpassed the US$1.62 estimate.
A broader AI hardware play
AMD has stepped up AI product launches and moved beyond selling individual chips to offering AI systems that combine processors, networking gear and related hardware. That also allows it to better rival Nvidia's rack-scale products, after the latter unveiled its "Vera" CPU in March to pair with its "Rubin" GPUs.
Su said AMD's 2027 rack-scale AI platform would bring together MI500 GPUs, Verano CPUs and Pensando networking, supporting both copper and optical connectivity.
Growing CPU demand for inference workloads has helped AMD capture market share from Intel. At its July AI event, Su said second-generation Helios AI servers, featuring the MI455X accelerator and TSMC-made "Venice" processor, were in full production.
In July, AMD agreed to sell Anthropic tens of billions of dollars worth of AI servers powered by up to 2GW of MI450 chips from early 2027, and to invest up to US$5 billion in the Claude maker. It also locked in up to 2.5GW of data-centre capacity through a deal with Core Scientific.
This article was produced with the assistance of artificial intelligence (AI), in accordance with our editorial policy.