TLDR
- AMD delivered Q4 earnings of $1.53 per share versus $1.32 expected and revenue of $10.3 billion against $9.67 billion consensus estimates.
- Shares tumbled 8% in after-hours trading despite beating estimates, as Q1 revenue guidance disappointed investors hoping for stronger numbers given AI chip demand.
- Data center segment revenue surged 39% annually to $5.4 billion, powered by strong demand for both AI GPUs and server CPUs from major cloud providers.
- The company secured OpenAI and Oracle as customers and plans to ship its Helios AI system in the second half of 2026.
- China revenue is set to crash from $390 million in Q4 to just $100 million in Q1 due to U.S. export control restrictions.
AMD delivered a knockout quarter Tuesday evening. Investors weren’t impressed. The chipmaker’s shares plunged 8% after hours despite posting results that topped Wall Street forecasts across the board.
Fourth-quarter adjusted earnings reached $1.53 per share. Analysts expected $1.32. Revenue landed at $10.3 billion compared to the $9.67 billion estimate. Net income soared to $1.51 billion from $482 million in the prior-year period. Revenue climbed 34% on an annual basis.
The problem wasn’t the past. It was the future. AMD’s Q1 revenue guidance came in at $9.8 billion at the midpoint. That beat the $9.42 billion consensus, but fell short of what some analysts anticipated given the current AI spending wave.
Advanced Micro Devices, Inc., AMD
The stock had already gained 13% this year before the report. Profit-taking after the run-up likely added fuel to the after-hours decline.
CEO Lisa Su sounded optimistic. “We are entering 2026 with strong momentum across our business, led by accelerating adoption of our high-performance EPYC and Ryzen CPUs and the rapid scaling of our data center AI franchise,” she stated in the release.
Data Center Business Powers Performance
The data center unit delivered impressive growth. Revenue hit $5.4 billion in the quarter, jumping 39% from the year-ago period. Both AI graphics processors and central processing units contributed to the gains.
Su emphasized that AI demand extends beyond GPUs. Server CPU sales are booming as hyperscalers build out infrastructure for cloud services and AI applications. Enterprises are modernizing their data centers to support new AI workflows.
AMD recently won major deals with OpenAI and Oracle for its AI chips. The company is preparing to launch Helios, an integrated server-scale AI system, later in 2026. Su said AMD is actively negotiating additional contracts for Helios and the upcoming MI450 chip. “The ramp is on schedule to start in the second half of the year, and MI450 is doing great,” she confirmed on the earnings call.
PC Sales and China Headwinds
The client and gaming division grew 37% year over year to $3.9 billion. Demand for Ryzen processors in laptops and desktop computers drove the increase. AMD has been steadily taking market share from Intel in the PC processor market.
The embedded business grew more slowly, rising just 3% annually to $950 million.
Export Rules Slam China Revenue
U.S. export controls are creating major challenges in China. AMD recorded $390 million in Instinct MI308 chip sales to China during Q4. The company projects only $100 million in China revenue for the current quarter.
The sharp decline reflects the impact of U.S. restrictions on shipping advanced AI chips to Chinese customers. This represents a 74% sequential drop in China sales.
HSBC analyst Frank Lee maintains a Buy rating with a $335 price target, up from $300. He argues that agentic AI will drive server CPU demand, benefiting AMD.
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