Author: Arsheeya Bajwa and Stephen Nellis
Feb 3 (Reuters) – Advanced Micro Devices forecast a slight decline in quarterly revenue on Tuesday, raising concerns about its ability to effectively challenge Nvidia in the booming artificial intelligence market and sending its shares tumbling 8% in after-hours trading.
The bleak forecast comes despite an unexpected increase in sales of certain artificial intelligence chips to China last quarter after the Trump administration approved orders AMD received in early 2025.
Without the $390 million in sales to China, AMD’s data center business’s fourth-quarter results would have fallen short of expectations.
AMD said it expects revenue for the quarter to be about $9.8 billion, plus or minus $300 million. This was down from $10.27 billion in the fourth quarter, which was up 34% year over year and higher than LSEG’s forecast of $9.67 billion.
Pales in comparison to NVIDIA
Although AMD is seen as one of the few competitors capable of seriously challenging Nvidia, investors have noticed a stark contrast between the two companies’ performance. AMD expects adjusted gross margin for the quarter to be 55%. Nvidia said it expects adjusted gross profit margin to be around 70% in fiscal 2027.
“Expectations of a massive quarterly blowout for AI-related hardware companies have distorted market expectations,” said Bob O’Donnell, president of TECHnaanalysis Research.
AMD CEO Lisa Su said on a conference call with investors that current first-quarter forecasts include sales of $100 million in China, where the situation remains “dynamic.”
The U.S. government has placed restrictions on the export of advanced chips to China, but AMD has received permission to sell modified versions of its MI300 series of artificial intelligence chips in China. Its MI308 chip competes with Nvidia’s H20 chip in China.
public sale
AMD accelerated product releases and began selling complete AI systems to better compete with Nvidia, which now offers “rack-scale” systems that combine GPUs, CPUs and networking equipment.
Last year, it signed a multi-year deal to supply artificial intelligence chips to ChatGPT owner OpenAI that would bring in tens of billions of dollars in annual revenue and give the startup the option to buy up to about 10% of the chipmaker.
Su reiterated on Tuesday that the company expects rapid growth in sales of its new flagship artificial intelligence servers to companies such as OpenAI in the second half of this year, and said the global memory chip crunch will not slow its plans.
“I don’t believe the ramps we put in place are going to be supply-constrained,” Sue said.
