AMD (AMD) reported its fourth quarter earnings after the bell on Tuesday, beating expectations on the top and bottom lines and providing a better-than-anticipated Q1 forecast.
The chipmaker’s announcement comes the same day President Donald Trump enacted a 10% tariff on goods made in China and a little over a week after China-based DeepSeek rocked the tech world with its low-cost AI models.
Despite the earnings beat and stronger guidance, the chipmaker’s stock fell almost 9% before the bell on Wednesday. AMD’s growth forecast for its data center business disappointed analysts looking for signs of momentum in AI chips as it goes up against Nvidia (NVDA).
AMD is battling to take market share in the AI space from Nvidia, which dominates sales of high-powered AI chips. At the same time, the company is contending with a continued slowdown in PC sales, even as the industry works to push consumers and enterprises toward AI PCs — computers that feature specialized processors designed to power AI tasks.
For the quarter, AMD reported earnings per share (EPS) of $1.09 on revenue of $7.56 billion. Wall Street was expecting EPS of $1.09 and revenue of $7.5 billion, according to Bloomberg consensus estimates. The company’s data center business, its largest segment by revenue, brought in $3.9 billion, just shy of expectations of $4.09 billion for the quarter.
AMD’s client segment, which includes chips for PCs, generated $2.3 billion for the quarter. Analysts were anticipating revenue of $1.98 billion. The company also saw Gaming revenue of $563 million. Wall Street was looking for $487 million.
For the current quarter, AMD anticipates revenue between $6.8 billion and $7.4 billion. Wall Street had expected $7.0 billion.
AMD shares have struggled throughout the last 12 months, falling 33% compared to rival Nvidia, which has jumped 80%. Still, that’s better than archnemesis Intel (INTC), which has seen shares fall 54% in the same time period.
While Trump’s tariffs on Chinese-made goods won’t impact the majority of the high-end chip market, since many are manufactured in areas like Taiwan, the broader market for electronics, including servers and PCs, which are built in China, will be impacted.
Read more: What are tariffs, and how do they affect you?
If businesses and consumers are turned off by higher prices on those systems and devices, chip manufacturers like AMD could face slowing sales.
Beyond the tariffs on Chinese goods, Trump has also raised the specter of tariffs specifically targeting semiconductors and products associated with them in a bid to bring manufacturing to the US. But those kinds of tariffs drive up prices for consumers for a long stretch of time, as building chip facilities is a complex task that takes years to complete.
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