Advanced Micro Devices (AMD) is experiencing a significant decline in its stock price following the release of its fourth-quarter earnings report, which revealed weaker-than-expected data center revenue. Despite a 69% year-over-year increase in data center sales to $3.86 billion, the figure fell short of the $4.14 billion anticipated by analysts. This shortfall has raised concerns about AMD's ability to compete with industry leader Nvidia in the AI and data center markets. The company's AI revenue outlook for early 2025 also failed to impress investors, contributing to the negative sentiment.
In addition to the data center concerns, AMD's gaming segment reported a steep 59% decline in revenue, attributed to reduced semi-custom chip sales as major customers like Microsoft and Sony focused on lowering channel inventory. While the client segment showed strong momentum with record revenue, the overall mixed performance across segments has not been enough to offset investor worries. AMD's guidance for the first quarter of 2025 projects revenue between $6.8 billion and $7.4 billion, with a focus on high-performance products, but the slower-than-expected AI growth remains a point of contention.
AMD shares are down 8.72% to $109.08 as of February 5th, from a previous close of $119.50.