Advanced Micro Devices (AMD) saw its stock drop 6.3%, closing at $112.01, its lowest level since November 2023, after reporting data center revenue that fell short of analysts’ expectations. While the company exceeded forecasts on both revenue and earnings per share, its data center sales reached $3.86 billion, marking 69% year-over-year growth but falling below the projected $4.14 billion.
The data center segment has been a key driver for AMD, benefiting from rising demand for AI-driven computing power. As major tech companies accelerate artificial intelligence development, AMD has positioned itself as a leading provider of graphics processing units (GPUs) for data centers. Despite this, Nvidia remains the dominant player in the AI chip market, with a market valuation nearing $3 trillion.
For 2024, AMD reported $12.6 billion in total data center revenue, with $5 billion coming from its AI-focused Instinct GPUs. CEO Lisa Su remains confident in AMD’s long-term growth trajectory, predicting that data center AI revenue will expand from $5 billion to tens of billions annually in the coming years.
However, some Wall Street analysts reacted negatively to the report. Citi downgraded AMD stock from a buy to neutral, while JPMorgan lowered its price target from $180 to $130. Bank of America’s Vivek Arya questioned whether AMD could carve out a strong competitive position against Nvidia.
Morgan Stanley highlighted AI market expectations as a key concern, suggesting that investors need more clarity on AMD’s ability to gain ground in the AI chip sector. The report also raised concerns over a weaker-than-expected first half of 2025, leading to increased pressure on AMD’s stock performance.
Despite the short-term challenges, AMD continues to expand in the data center and AI computing space, aiming to secure a significant share of the rapidly growing AI-driven semiconductor market. Investors are closely watching how the company differentiates itself from Nvidia and whether it can accelerate growth in AI-focused chips.
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