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AMD AI Chip Forecast Falls Short, Stock Drops 9.1%

AMD's AI chip forecast falls short at $4 billion against expectations, shares drop 9.1% amid supply constraints.

By Barry Stearns

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4/30, 18:32 EDT
Advanced Micro Devices, Inc.
Intel Corporation
NVIDIA Corporation
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Key Takeaway

  • AMD's stock fell 9.1% after AI chip forecast of $4 billion missed estimates, against analyst expectations of $8 billion.
  • Current quarter sales projection is $5.7 billion, slightly below analyst expectations due to weakened demand for gaming chips.
  • Despite competition, AMD's MI300 AI chip sales hit $1 billion since Q4 2023 launch, with data center business growing by 80%.

AMD's Mixed Financial Forecast

Advanced Micro Devices Inc. (AMD) experienced a notable decline in its stock value, dropping as much as 9.1% in extended trading. This downturn followed the chipmaker's announcement of a less optimistic forecast for its artificial intelligence (AI) processors, particularly the MI300 lineup. Despite an increase in the revenue projection for this product line from $3.5 billion to $4 billion, investor expectations, fueled by analyst predictions, had reached as high as $8 billion. AMD's CEO, Lisa Su, acknowledged supply constraints as a significant challenge, stating, "We are tight on supply...if we had more supply, we have demand."

Revenue Projections and Market Response

For the current quarter, AMD projected sales of approximately $5.7 billion, slightly below the average analyst estimate of $5.72 billion. This forecast is partly attributed to weakened demand for video game hardware chips. Following these announcements, AMD shares fell to a low of $143.90 in late trading, a stark contrast to their closing at $158.38, which marked a 7.4% increase for the year. This performance comes in the wake of a downbeat forecast from Intel Corp., which also cited sluggish demand expectations for the first half of the year. However, AMD's growth projection of 6% for the current quarter slightly outpaces Intel's flat growth forecast.

Competitive Landscape and AI Accelerators

AMD's efforts to compete in the AI accelerator market, primarily dominated by Nvidia Corp., are significant. Nvidia's data center business is expected to generate $95.9 billion in revenue, dwarfing the combined revenues of Intel and AMD. Despite this, AMD's MI300 AI chip sales have surpassed $1 billion since its launch in the fourth quarter of 2023, highlighting its potential in the AI and server processor market. AMD's data center business reported an 80% growth, with sales reaching $2.3 billion, aligning with the average projection. However, the gaming computer-related revenue fell short of expectations, with $922 million against an anticipated $965.5 million.

Management Quotes

  • Lisa Su, CEO of AMD:

    "We are tight on supply. There’s no question that — in the near term — if we had more supply, we have demand."