AMD Stock Down 9% on Growth Forecast

AMD Stock Analysis

Shares of Advanced Micro Devices (AMD) were tumbling 9% in pre-market trading Wednesday despite strong Q4 earnings that beat Wall Street's revenue and EPS forecast.

The AI chipmaker showed solid quarterly results across the board with its CPU business stealing market share from Intel (INTC), its gaming business rebounding sequentially, and its data center revenue jumping sharply. 

All of that was undone, however, by management's guidance for the coming year. There isn't any growth predicted in the first half, and back half 2025 expansion means AMD won't have the same sort of growth trajectory Nvidia (NVDA) enjoyed in AI.

Checking the rearview mirror

Fourth-quarter revenue jumped 24% to a record $7.7 billion. Adjusted net income of $1.78 billion, or $1.09 per share, was 42% higher. Both beat analyst estimates of $7.5 billion and $1.08 per share, respectively.

AMD Stock AnalysisThe growth was driven by its x86 PC CPU business rocketing 56% higher. Although gaming revenue was down 59% year-over-year, it was up 22% from the third quarter to $538 million. All eyes, however, were fixated on the data center business, which houses AMD's AI accelerator operations.

Revenue soared to a record $3.8 billion, up 69% from a year ago, while for the full year it nearly doubled to $12.58 billion from $6.5 billion.

Here's What to expect going forward

The problem for the semiconductor stock was that it's outlook didn't inspire confidence. 

President and CEO Lisa Su told analysts that for the first half of 2025, its AI GPU revenue would likely be on par with the second half of 2024, indicating little growth. Because it would introduce a bunch of new GPUs throughout the year, she expected growth to occur in the back half of the year.

It suggests Advanced Micro Devices has missed out on the sort of meteoric rise Nvidia enjoyed when AI burst onto the scene. The race is on, but AMD is far behind with little chance of catching up.

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