AMD's data center business grew 80% but the stock is down

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AMD sells AI chips that compete with Nvidia, but it makes most of its money from PC chips.

AMD reported first-quarter sales on Tuesday that were slightly ahead of Wall Street expectations, and provided an in-line forecast for the current quarter.Here's how it did versus LSEG consensus expectations for the quarter ending in March:AMD said it expects about $5.7 billion in sales in the current quarter, in-line Wall Street estimates of about $5.70 billion. That would represent about 6% annual growth.

The company reported net income of $123 million, or 7 cents per share, versus a net loss of $139 million, or 9 cents per share, during the year-earlier period. Revenue was up about 2% from a year earlier. The company's adjusted earnings didn't compare to analyst forecasts because AMD had added a new item for inventory loss.AMD said its closely-watched Data Center segment grew 80% on a year-over-year basis to $2.

AMD's original business, processors for chips and PCs, is reported as client segment revenue. AMD reported $1.4 billion in first-quarter sales, a 85% annual increase, suggesting that last year's PC slump is over. AMD is also highlighting its chips being able to run artificial intelligence programs locally, which would allow it to power so-called"AI PCs" that many industry participants are banking on to drive new laptop and desktop sales.

The company's embedded segment, made up of products acquired as part of the Xilinx acquisition in 2022, reported falling sales, dropping 46% on an annual basis to $846 million.

 

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