Technology

AMD reports strong growth in data center business – yet stock falls

AMD increases its revenue thanks to AI chips, but subdued expectations in the gaming segment weigh on the stock.

Eulerpool News Feb 7, 2025, 2:00 AM

Advanced Micro Devices (AMD) significantly increased its revenue in the fourth quarter, driven by strong demand for AI chips in the data center business. However, the figures did not convince investors – the stock fell 3.8 percent after hours.

Revenue in the data center division, which includes the AI chip series Instinct, climbed 69 percent to 3.9 billion US dollars. Analysts had expected slightly more at 4.14 billion dollars. Overall, the company's revenue increased by 24 percent to 7.66 billion dollars, exceeding the forecasts of 7.53 billion dollars.

While sales in the business with Ryzen processors grew by 58 percent to 2.3 billion dollars, weaker gaming and embedded sales caused strain. The gaming division fell by 59 percent to 563 million dollars, the embedded business decreased by 13 percent to 923 million dollars.

Profit declined compared to the previous year: Net income was $482 million (29 cents per share) after $667 million (41 cents per share) the previous year. Adjusted, AMD earned $1.09 per share – just above analysts' expectations of $1.08.

Despite the mixed figures, CEO Lisa Su was optimistic for 2025 and pointed to the growing market potential for high-performance and adaptive computing solutions. The revenue forecast for the current quarter, ranging from 6.8 to 7.4 billion dollars, exceeds analysts' expectations of 7 billion dollars.

The AI boom is driving demand for AMD chips, but compared to competitors like Nvidia, AMD's market positioning is viewed more skeptically by investors. The company announced in November that it would cut four percent of its workforce – about 1,040 jobs – to focus more on the AI business.

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