Investors are Not Impressed by AMD’s AI-Powered Revenue Estimate

On Tuesday, AMD (AMD.O) released a fresh forecasted forecast for quarterly revenue that exceeded Wall Street projections, relying on robust demand for its processors from significant increases in data-center capacity to fuel AI technology.

However, after the company more than quadrupled this year due to AI excitement, its shares slumped about 9% in extended trade, indicating that investors were hoping for an even better outlook. According to Emarketer analyst Jacob Bourne, “AMD is now in a similar position to Nvidia and the hyperscalers, where investors are looking for evidence that AI infrastructure investments will continue to translate into accelerating returns.”

As big internet businesses and governments across the world increase their expenditure on AI infrastructure, the Santa Clara, California-based company, which is considered to be the chip giant Nvidia’s (NVDA.O), opens a new tab closest competition in the market for graphics processing units.

According to data gathered by LSEG, AMD anticipates third-quarter revenue of roughly $13 billion, plus or minus $300 million, while analysts project $12.52 billion. It anticipates an adjusted gross margin of roughly 56%, which is mostly consistent with projections.

CEO Lisa Su stated on a post-results conference call that the firm anticipates data-center sales to more than double in 2027, total revenue growth above its target of more than 35%, and annual earnings above the $20-per-share goal announced during its 2025 analyst day.

According to the estimate, sales of AMD’s data-center processors increased in the second quarter, indicating that the company’s efforts to challenge Nvidia’s hegemony in the AI chip market are starting to pay off.

In comparison to forecasts of $6.48 billion, AMD’s quarterly data-center revenue more than quadrupled to $6.72 billion. From $5.78 billion in the first quarter, it increased sequentially by 16.3%.

Revenue during the second quarter exceeded the forecast of $11.28 billion by 50%, reaching $11.54 billion. Additionally, the adjusted profit of $1.66 per share above the $1.62 projection.