Key Stats for AMD Stock
- Pre-market Price change for AMD stock: -9%
- $AMD Share Price as of Feb. 3: $242
- 52-Week High: $267
- $AMD Stock Price Target: $289
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What Happened?
Advanced Micro Devices (AMD) stock is down over 9% in pre-market after the chipmaker issued first-quarter guidance that fell short of the highest analyst expectations.
The sell-off came despite AMD reporting strong fourth-quarter results that topped estimates across the board.
AMD posted fourth-quarter revenue of $10.27 billion, beating consensus estimates of $9.67 billion. The company guided for first-quarter revenue of $9.8 billion, plus or minus $300 million, which was above the $9.38 billion consensus.
However, some analysts had expected even stronger guidance given the ongoing AI chip spending boom.
The disconnect came down to the details.
AMD disclosed that it shipped approximately $390 million in MI308 chips to China in the fourth quarter, revenue not included in prior guidance. When you back out those unexpected China sales, the beat looked far less impressive.
“First, expectations were pretty sky high,” said Chris Rolland, an analyst at Susquehanna, on CNBC’s “Closing Bell Overtime.” “Secondly, they announced they shipped Chinese revenue in the quarter that was unexpected. This was not in street numbers, so when you account for that, the beat was far less substantial than we would’ve thought.”
For Q1, AMD expects another $100 million in China revenue from MI308 sales but does not forecast any additional China revenue beyond that, given the dynamic regulatory environment.
The company is still waiting for licenses to ship its newer MI325 chips to Chinese customers.
AMD stock has surged more than 100% in the past year on rising AI demand.
The chipmaker, which competes directly with Nvidia in the AI accelerator market, is positioning itself as a key alternative supplier as hyperscalers look to diversify their chip purchases.
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What the Market Is Telling Us About AMD Stock
The market reaction suggests investors wanted to see AMD more aggressively capture share in the red-hot AI accelerator market. CEO Lisa Su remains bullish on the company’s prospects, reaffirming AMD’s ambitious growth targets from its November Analyst Day.
- AMD is targeting revenue growth of greater than 35% annually over the next three to five years.
- The company expects to grow the Data Center segment revenue by more than 60% annually over that period and scale its AI business to “tens of billions” in annual revenue by 2027.
- The key inflection point comes in the second half of 2026 with the launch of the MI450 series and Helios platform.
Su emphasized that development is proceeding “extremely well” with customer engagements continuing to expand.
In October, AMD inked a major deal with OpenAI that will see the startup deploy 6 gigawatts of Instinct GPUs over multiple years, beginning with 1 gigawatt in the second half of 2026.
Oracle also announced plans to deploy 50,000 AMD AI chips starting later this year.
“The MI450 series development is going extremely well,” Su said on the earnings call. “We’re right on track for a second half launch and beginning of production.”
She added that AMD is working with multiple customers beyond OpenAI who are interested in ramping MI450 quickly.
Beyond AI accelerators, AMD posted strong results in its server CPU business.
The company saw record EPYC processor sales and exited the year with record market share. Su noted that server CPU demand remains “very strong” as hyperscalers expand infrastructure and enterprises modernize data centers for AI workloads.
For the first quarter, AMD expects server CPU revenue to grow sequentially, which is unusual given normal seasonal patterns.
The company has been increasing supply capacity over recent quarters to meet demand and expects to continue growing throughout the year.
CFO Jean Hu guided to a first-quarter gross margin of approximately 55%, up 130 basis points year over year despite significantly ramping MI355 shipments.
The company is benefiting from a favorable product mix across all segments, with newer-generation products such as Turin CPUs and MI355 GPUs commanding higher margins.
One area of concern is the gaming segment. AMD stock investors should note that semi-custom revenue (primarily game consoles) is expected to decline by a “significant double-digit percentage” in 2026 as the console cycle enters its seventh year.
However, Microsoft’s next-generation Xbox, featuring an AMD semi-custom chip, is progressing well toward a 2027 launch.
Rolland from Susquehanna noted that despite the guidance disappointment, demand for AMD’s chips in data centers remains strong. The company is hinting at multiple multi-gigawatt contracts beyond OpenAI that could materialize.
AMD generated a record free cash flow of $2.1 billion in the fourth quarter, nearly doubling year-over-year. For the full year, the company produced $7.6 billion in Data Center and Client segment revenue growth, demonstrating the breadth of its growth drivers beyond just AI accelerators.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
