AMD shares fall 7% as sales outlook fails to meet AI expectations

Shares of US semiconductor company AMD fell about 7% in after-hours trading Tuesday after the chipmaker’s third-quarter sales outlook failed to satisfy elevated investor expectations following an artificial intelligence-driven rally.

The company forecast third-quarter revenue of $13 billion, plus or minus $300 million, below analysts' expectations.

AMD shares closed the regular trading session 7% higher at $518.58 before retreating following the results. The stock has more than doubled since the beginning of the year as investors increasingly viewed AMD as a major challenger to Nvidia in the market for AI processors.

Second-quarter revenue climbed 50% year-on-year to $11.5 billion, exceeding expectations of about $11.3 billion.

Adjusted earnings reached $1.66 per share, slightly above market estimates of $1.62.

Revenue from AMD’s data center division more than doubled to $6.7 billion, supported by demand for accelerator chips and central processing units used in AI infrastructure. Analysts had expected approximately $6.6 billion.

Meanwhile, sales from the company’s personal computer and gaming businesses rose 6% to $3.8 billion.

AMD CEO Lisa Su unveiled new AI products aiming to outperform competing Nvidia offerings, increasing expectations for faster revenue growth.

The company estimates that the market for AI data center processors could reach $1.4 trillion by 2030 as major technology firms accelerate spending on computing infrastructure.

AMD produces accelerator chips used to train and operate AI models, although Nvidia remains the dominant supplier in the sector.

The company is also gaining market share from Intel in central processing units used in personal computers and servers.

Increased investment in AI data centers has contributed to shortages and higher prices for memory chips, placing pressure on manufacturers of personal computers, smartphones and other electronic devices.