Semiconductors
AMD Q4 Earnings: Q1 Decline in Data Center, Mgmt Drops AI Guidance
AMD is seeing weak price action for two reasons. First, the company is guiding for a decline QoQ from Q4 to Q1 across most segments, including the data center. Management also implied H1 of 2025 will be flat compared to H2 of 2024 in the data center. The market’s reaction is saying, “this isn’t exactly Nvidia.” Second, management is dropping AI guidance from their commentary. If you’ve been following along, then you’re aware that AMD provides guidance around their expectations for AI-related GPU sales. For example, they stated this year GPUs would “exceed $5 billion” yet we started the year with commentary that GPUs would be in the range of $2 billion. The Street thinks dropping AI guidance is hiding an issue, and communicating that there must be more weakness ahead. Almost-always, when a management team drops a key metric, it means it’s too weak to continue reporting this key metric. I believe it’s the opposite, that AMD is setting up the equal playing field before the MI350 and MI400 architectures arrive, as it’s been generally understood to be the moment when AMD can close the gap with Nvidia on some workloads.
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