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Investing.com - Shares of Advanced Micro Devices (NASDAQ:AMD) sank by more than 5% in premarket hours trading after the group unveiled underwhelming quarterly revenue at its crucial data center business.
Revenue at the unit, which houses AMD’s all-important artificial intelligence chips that are viewed as central to the company’s future growth, rose 14% to $3.2 billion. Analysts had seen the figure at $3.2 billion, according to LSEG data cited by Reuters.
By comparison, AI-darling Nvidia (NASDAQ:NVDA) -- one of AMD’s closest rivals -- posted a 73% jump in data center revenue to $39.11 billion in its fiscal first quarter earlier this year.
AMD CEO Lisa Su later told investors in a post-earnings call that AI chip revenue had fallen versus a year ago, due largely to U.S. restrictions on semiconductor exports to China and an ongoing transition to its next-generation MI350 chips.
The data center performance and Su’s comments overshadowed a higher-than-projected third-quarter revenue outlook of about $8.7 billion, plus or minus $300 million. Notably, AMD flagged that the guidance excludes revenue from shipments of its MI308 AI chip to China, adding that license applications are currently being reviewed by the U.S. government.
For the three months ended June 29, 2025, AMD posted adjusted diluted earnings per share of $0.48 on revenue of $7.69 billion, compared with analyst expectations for per-share income of $0.48 and revenue of $7.41 billion.
"Our impression is positive," analysts at Daiwa Capital said in a note to clients, adding that "this was a ‘price to perfection quarter’" for AMD after its shares spiked by more than 120% in four months.
Despite the pullback in the shares before the opening bell on Wall Street on Wednesday, "overall, we believe investors will be happy with this earnings report going forward," the analysts said.
(Yasin Ebrahim contributed reporting.)