The upbeat forecast from AMD could bolster investor confidence in its capacity to effectively compete with industry leader Nvidia. Concerns about AMD's perceived lag in the highly lucrative AI market had contributed to a more than 17% decline in its share price this year.
Similar to AMD, Nvidia has also informed Wall Street about the necessity of obtaining an export license for a chip specifically designed to comply with the United States' increasingly stringent restrictions on technology exports to China. Nvidia anticipates a substantial $5.5 billion charge as a consequence of these regulations, according to a recent securities filing.
Despite escalating tensions in the U.S.-China trade landscape, demand for AMD's advanced processors, which power complex AI systems for major clients like Microsoft and Meta Platforms, remains strong. Cloud computing giants are continuing their significant investments in building out AI infrastructure.
Following the earnings announcement, shares of AMD, headquartered in Santa Clara, California, experienced a 4.2% surge in after-hours trading.
AMD's forecast includes an $800 million charge stemming from the new U.S. curbs on chip exports to China. Consequently, the company projects an adjusted gross margin of 43%, which represents an 11 percentage-point decrease when excluding this charge.
For the second quarter, AMD anticipates revenue of approximately $7.4 billion, with a margin of error of plus or minus $300 million. This compares favorably to the average analyst estimate of $7.25 billion, as compiled by LSEG data.
According to Kinngai Chan, an analyst at Summit Insights, this better-than-expected forecast is partly attributable to accelerated customer purchasing aimed at building inventory in anticipation of upcoming U.S. tariffs.
In February, AMD shifted away from its long-standing practice of providing specific sales forecasts for its AI chips. However, CEO Lisa Su had previously stated that the company anticipates "tens of billions" of dollars in sales in this segment "in the next couple of years."
AMD reported a significant 57% jump in data center sales, reaching $3.7 billion, which surpassed analyst estimates of $3.62 billion. The company's data center segment encompasses a significant portion of its AI hardware offerings.
In contrast, chipmaker Marvell Technology and server manufacturer Super Micro both disappointed investors in Tuesday afternoon trading. Marvell postponed its planned Investor Day until calendar year 2026, citing economic uncertainties, while Super Micro lowered its revenue forecast for 2025, adding to concerns about its position within the AI market. Following these announcements, Marvell shares declined by 6% in after-hours trading, and Super Micro's shares fell by 4%.
According to Bob O’Donnell, chief analyst at Technalysis Research, AMD is continuing to gain market share in AI data center chips, including its central processing units (CPUs), which often receive less attention than the graphics processing units (GPUs) used for AI acceleration.
For the first quarter, AMD reported a net profit of 96 cents per share on an adjusted basis, factoring out stock compensation and other items. This figure exceeded the average analyst expectation of 94 cents per share.
The company's revenue for the first quarter surged by 36% to $7.44 billion, also surpassing analyst estimates of $7.13 billion.
“We delivered an outstanding start to 2025 as year-over-year growth accelerated for the fourth consecutive quarter driven by strength in our core businesses and expanding data center and AI momentum,” CEO Lisa Su stated in the earnings release.