AMD reported higher-than-expected revenue in the second quarter of fiscal year 2025, but the stock market reaction was still negative. The data center division, which includes AI chips, failed to convince investors.
This was reported by Reuters. Total quarterly revenue came in at $7.69 billion, an increase of more than 30 percent compared to the same quarter last year. Analysts had expected an average of $7.42 billion. Earnings per share were 47 cents, significantly higher than the 16 cents a year earlier, but just below the expected 47.9 cents. In after-hours trading, the share lost more than six percent and fell to $163.37.
Gap with Nvidia widens
Although AMD has already posted a share price gain of more than 40 percent this year, leaving many chip competitors behind, the recent figures are disappointing in light of global AI investments. Revenue from the data center division rose 14 percent to $3.2 billion, but remained far behind competitor Nvidia, which saw its data center revenue rise 73 percent to over $39 billion in the same quarter.
Demand for AI chips remains strong. Major customers such as Microsoft, Meta, and OpenAI are investing billions in infrastructure to support AI applications. Meta recently raised its annual investment forecast to a maximum of $72 billion, and Microsoft is forecasting record spending of $30 billion in the current quarter.
AI is not a big success for AMD
AMD has so far benefited only marginally from the AI wave. According to CEO Lisa Su (photo), AI chip sales declined year-on-year, mainly due to US export restrictions on China and the transition to a new generation of Instinct MI350 chips. Production of these chips started ahead of schedule in June, and the company expects a significant ramp-up in the second half of the year.
For the third quarter, AMD expects revenue of approximately $8.7 billion, with a margin of $300 million. The gross margin is estimated at roughly 54 percent. This does not take into account shipments of the MI308 chip to China, as the US government is still reviewing export licenses.
The restrictions on exports to China are expected to cost $1.5 billion in revenue this year, with the greatest impact in the second and third quarters.