:Advanced Micro Devices on Tuesday forecast fourth-quarter revenue just shy of estimates and raised its artificial intelligence chip sales forecast to $5 billion for 2025 – not enough to impress investors.
AMD stock slid nearly 7 per cent in extended trading, erasing most of the 8 per cent gain in the last three trading days and much of the more than 10 per cent gained this year.
Demand for AI chips from big technology companies including Microsoft and Meta has been rising much faster than their supply from AMD and larger rival Nvidia, limiting the chip companies’ ability to tap the order surge. AMD CEO Lisa Su said that supplies of AI chips would be tight going into next year.
“AMD’s stock was priced for a beat and raise,” Summit Insights analyst Kinngai Chan said. “Clearly, AMD’s (fourth-quarter) outlook was not good enough for investors.”
Revenue in its data center business, which includes AI chips, surged 122 per cent to $3.5 billion.
AMD still trails front-runner Nvidia, which commands about 80 per cent of the AI semiconductor market. Su raised the forecast for AI chips, which are included in the data center segment, by half a billion from the $4.5 billion it estimated in July.
In the earnings call with analysts, Su also discussed Microsoft and Meta expanding their use of the company’s AI chips. Microsoft and Oracle offer the MI300X chips for rent as part of their cloud computing service.
Analysts largely believe Nvidia will maintain its majority market share for the foreseeable future, owing in part to its entire AI ecosystem that includes the CUDA software and networking equipment.
Capacity for the production of AI chips will be very tight going into 2025, the world’s largest contract chip manufacturer TSMC said in July, marking a significant hurdle for the supply of these advanced semiconductors. AMD’s ability