Quick Overview
Advanced Micro Devices (AMD) delivered a comprehensive victory in its first-quarter earnings report, with shares rising over 12% in after-hours trading on Tuesday.
The chipmaker reported earnings per share of $1.37, easily surpassing analyst expectations of $1.29. Total revenue reached $10.25 billion, exceeding the anticipated $9.89 billion. These figures represent a significant improvement compared to the same period last year, when AMD's earnings per share were $0.96 and revenue was $7.43 billion.
Prior to Tuesday's announcement, AMD's stock had already risen about 60% year-to-date. Following the earnings release, shares climbed to $411.94 in after-hours trading, up $56.68 from the regular session close of $355.26.
Advanced Micro Devices (AMD)
Strong Performance in Data Center Segment
The data center segment performed particularly well, generating $5.8 billion in revenue, a staggering 57% year-over-year increase, slightly exceeding analyst predictions of $5.6 billion. The segment's operating profit margin reached 28%, though it was slightly below Wall Street's expectations.
The only concern is that the forecast for operating expenses was slightly higher than analyst models.
CEO's Outlook on AI Infrastructure
During the earnings call, CEO Lisa Su made bold predictions. She stated, “We are confident that we can achieve data center AI revenues in the hundreds of billions of dollars annually by 2027.” She noted that AMD expects to exceed its long-term growth target of over 80% in the coming years.
Su emphasized the increasingly important role of CPUs in AI infrastructure. She predicted that AMD's CPU market potential would grow at a rate of 35% annually, potentially reaching $120 billion by 2030.
“With the widespread adoption of AI, you need more inference and agents. All of this requires CPUs for coordination and data processing,” Su explained.
Significant Partnerships and Key Milestones
AMD has entered into significant agreements with Meta Platforms and OpenAI, jointly issuing warrants for up to 320 million shares of AMD stock, which will become effective upon meeting delivery milestones and performance metrics. The company expects to begin shipping under these contracts in the second half of 2026, representing a significant validation of its expansion capabilities.
Outside of the data center, AMD's other business segments performed robustly. The client segment generated $2.9 billion in revenue, exceeding expectations of $2.73 billion. The gaming segment brought in $720 million, also above the forecast of $668 million. Overall, non-data center revenue grew by 19%, reaching $4.5 billion.
Intel's quarterly results, announced on April 23, also exceeded expectations, driven by strong data center performance, with shares rising 24%. AMD is now leveraging this favorable momentum as it enters the second quarter.
IDC predicts that global PC shipments will decline by 11.3% by 2026, which is related to memory.