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Chip designer Advanced Micro Devices, Inc. delivered a tepid set of earnings that saw the firm beat analyst estimates for most metrics except for its data center business. AMD’s data center miss indicated that the firm’s ability to capture the AI market from NVIDIA is more constrained than Wall Street had estimated. While analysts polled by FactSet were expecting AMD to earn $4.14 billion in data center revenue, AMD brought in $3.9 billion instead for a hefty miss.
AMD’s Client Computing Business Shines In Q4 & Grows Sales By 52% Annually
Ahead of AMD’s earnings, analysts polled by FactSet had estimated the firm to earn $7.53 billion in revenue along with $1.08 in adjusted earnings per share. AMD’s earnings saw the firm rake in $7.66 billion in revenue and $1.09 in adjusted EPS to comfortably beat the top and bottom-line analyst estimates.
However, a deeper look into the firm’s revenue split by business division reveals a mixed picture. AMD’s bread and butter segment, i.e., data center, earned $3.9 billion in sales. Analysts, on the other hand, were expecting data centers to earn $4.14 billion in revenue for a rather hefty miss. However, to make up for the data center miss, AMD’s client computing business, which sells its personal computing processors, posted $2.3 billion in revenue to beat analyst estimates of $1.93 billion by a large margin.

Ahead of today’s earnings, analysts had speculated that AMD might experience a weaker consumer PC market this year. AMD’s gaming segment raked in $563 million, which also beat analyst estimates of $498 million but marked a hefty 59% annual drop. The firm attributed the drop to lower sales of semi-custom chips that are typically used in gaming consoles.
Crucially, AMD’s embedded business which is a continuation of its Xilinx acquistion posted $923 million sales and missed analyst estimates of $960 million. The embedded and data center miss indicates that the firm is facing difficulties in targeting the enterprise computing market.
Its data center and embedded businesses also target non-AI information technology spending, which has remained muted even as orders for data center products have materialized at several chip companies. As per AMD, the drop in embedded revenue stemmed from “mixed end market demand.”
Looking ahead at the first quarter, AMD guided $7.1 billion in revenue which stood above analyst estimates of $7 billion. AMD’s shares slipped by as much as 5.4% in aftermarket trading presumably due to its data center weakness. Data center has been AMD’s largest business for quite some time, with the DeepSeek selloff igniting debate that low power and performance requirements to train AI systems could help AMD.