FRANKFURT, Feb 4, 2026, 14:13 CET
- AMD shares dropped almost 7% in premarket trading after the company forecasted first-quarter revenue would fall short of the previous quarter
- Chipmaker posted a record Q4 revenue of $10.27 billion, driven by a 39% jump in data center sales
- A China-approved AI chip shipment lifted results, though analysts remain skeptical about the pace of AMD’s AI business growth
Shares of Advanced Micro Devices dropped almost 7% in premarket trading Wednesday after the company’s first-quarter sales forecast showed a decline from the previous quarter, raising fresh questions about how fast it can close the gap with Nvidia in AI chips.
This reaction is crucial since the AI rally has made investors quick to punish even slight signs of slowing growth. Chipmakers and server suppliers are valued based on expectations of strong data-center demand, with forecasts now carrying more weight than past earnings beats.
Spillover hit software stocks as worries grew that emerging AI tools might displace elements of the current software stack, underscoring how quickly sentiment around AI investments can shift.
AMD projects first-quarter revenue around $9.8 billion, with a $300 million margin of error, and expects a non-GAAP gross margin near 55%. These non-GAAP results exclude certain expenses to offer a clearer view of core operations. The forecast factors in roughly $100 million in Instinct MI308 GPU sales to China; these GPUs are key for AI workloads. Cloudfront
AMD raked in a record $10.27 billion in revenue for the December quarter, marking a 34% jump from last year. Gross margin hit 54%, with diluted earnings per share at $0.92, while adjusted earnings climbed to $1.53 per share. CEO Lisa Su dubbed 2025 a “defining year,” and CFO Jean Hu highlighted the company’s ability to deliver “profitable growth at scale.” Amd
Data center revenue jumped 39% to $5.4 billion, fueled by strong demand for EPYC server processors and increased Instinct GPU shipments. Client and gaming revenue grew 37%, hitting $3.9 billion, while embedded revenue inched up 3% to $950 million.
AMD reported that the quarter included roughly $390 million in Instinct MI308 sales to China, plus about $360 million from releasing reserved MI308 inventory and related charges. Without these factors, the non-GAAP gross margin would have come in around 55%.
Bernstein analyst Stacy Rasgon called the quarter “inline” once you exclude the China boost, noting that near-term AI figures aren’t really showing a spike yet. Su expects demand for AMD’s next-gen AI servers to “accelerate sharply” in H2 and dismissed concerns that a global memory-chip shortage would limit production. Meanwhile, Nvidia dipped 0.6% and Broadcom lost 1.24% in premarket trading. Super Micro Computer surged over 10% after lifting its annual revenue forecast. Reuters
AMD highlighted robust cash generation this quarter, finishing with $10.6 billion in cash, cash equivalents, and short-term investments. The company reported around $2.3 billion from operating activities and approximately $2.1 billion in free cash flow.
Investors want firmer evidence that AMD can translate its AI accelerator hype into steady, widespread revenue gains—not just a handful of big orders. Although the company’s Q1 forecast edges past analyst expectations, it still points to a drop from the December quarter.
However, this route carries significant policy and execution risks. Sales of MI308 chips tied to China hinge on U.S. export licenses, and any shift in those approvals could slam revenue and margins. On top of that, competition is fierce—Nvidia is aggressively securing customers and partners. If Big Tech eases up on AI investments, it would challenge the optimistic projections baked into current chip valuations.
