AMD beat Q4 forecasts but cautious guidance dented confidence as investors pushed for faster AI upside.
Summary:
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AMD beat Q4 earnings and revenue expectations
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Guidance disappointed, triggering a sharp after-hours sell-off
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AI revenue momentum lagged high-end investor expectations
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China demand contributed materially to AI chip sales
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Management reaffirmed ambitious long-term AI growth targets
Advanced Micro Devices delivered a strong finish to 2025 on headline results, but a softer near-term outlook weighed heavily on investor sentiment, sending the stock lower after hours. The chipmaker reported adjusted earnings per share of $1.53 for the December quarter, comfortably ahead of expectations, alongside revenue of $10.27 billion, also above consensus forecasts.
Despite the solid beat, attention quickly shifted to forward guidance. AMD forecast first-quarter revenue of around $9.8 billion, a figure that fell short of the most optimistic market expectations and was enough to disappoint investors positioning for a more aggressive AI-driven acceleration. While the guidance still sits above average analyst forecasts, sentiment had been leaning toward a print closer to, or even above, the $10 billion mark.
The reaction highlights the increasingly demanding bar being set for AI-exposed semiconductor names. Investors have been looking for clearer evidence that AMD is rapidly closing the gap on Nvidia in high-performance AI computing, particularly in data centre applications. While AMD continues to make progress, the company acknowledged that its most powerful next-generation AI design will only come to market later this year, leaving near-term growth expectations more constrained.
One notable positive from the quarter was strong AI chip demand from China. AMD disclosed that it generated $390 million in Q4 sales from China tied to its MI308 AI chip, underscoring the importance of overseas markets to its current AI revenue base. This contribution helped support overall data centre performance, even as broader expectations remained elevated.
Looking further ahead, AMD struck a confident tone on its longer-term trajectory. Management reiterated expectations that its AI business could scale to tens of billions of dollars in annual revenue by 2027, supported by rapid expansion in data centre unit shipments. The company expects data centre volumes to grow at an annual rate exceeding 60% over the next three to five years, reflecting both product upgrades and broader adoption of AI workloads.
In short, AMD’s Q4 results underscored solid execution and meaningful AI progress, but also revealed the tension between improving fundamentals and the market’s increasingly aggressive expectations for near-term AI monetisation.
This article was written by Eamonn Sheridan at investinglive.com.