On February 8, 2025, Advanced Micro Devices (AMD) reported its fourth-quarter earnings, revealing a significant increase in data center revenue, which rose 69% year over year to $3.9 billion. Despite this growth, the revenue fell short of analysts’ expectations, leading to a decline in AMD’s stock price, which has dropped over 35% in the past year.
- AMD's data center revenue grew 69% year-over-year.
- Q4 revenue increased 24% to $7.66 billion.
- Gaming segment revenue fell 59% to $563 million.
- AMD holds over 50% market share in EPYC CPUs.
- Stock down over 35% in the past year.
- Attractive valuation with P/E under 24.
The company’s overall revenue for the quarter reached $7.66 billion, a 24% increase from the previous year, while adjusted earnings per share (EPS) were $1.09, slightly exceeding analyst forecasts.
AMD’s data center business has become a focal point for the company, contributing significantly to its revenue growth. The segment’s performance was bolstered by strong sales of its EPYC central processing units (CPUs) and Instinct graphics processing units (GPUs). However, analysts had anticipated data center revenue to be higher, at $4.14 billion, indicating that while growth is robust, it has not met market expectations.
Key highlights from the earnings report include:
- Data center revenue surged 69% year over year.
- Client segment revenue increased 58% year over year to $2.3 billion.
- Gaming segment revenue fell 59% to $563 million.
- Overall Q4 revenue rose 24% to $7.66 billion.
- Adjusted EPS increased 42% to $1.09, beating expectations.
Looking ahead, AMD has projected first-quarter revenue between $6.8 billion and $7.4 billion, which would represent a growth of approximately 30% at the midpoint. The company expects continued revenue growth driven by its data center and client businesses, despite anticipated declines in its gaming and embedded segments. AMD’s forecast for the full year includes double-digit percentage growth in both revenue and EPS.
In summary, while AMD’s fourth-quarter results indicate strong growth in its data center and client segments, the stock’s decline raises questions about its future performance. The company’s ability to compete effectively in the gaming market remains uncertain, but its leadership in the CPU market positions it favorably for continued growth.
