AMD stock falls over 16 percent despite beating Q4 earnings estimates

TLDR

• AMD stock declined more than 16 percent after the company released its Q4 earnings report.
• The company reported earnings per share of $1.53 on revenue of $10.3 billion which beat analyst expectations.
• Despite strong results in data center and PC segments investors expected higher performance and guidance.
• AMD projected Q1 revenue between $9.5 billion and $10.1 billion which exceeded Street estimates but fell short of hopes.
• The gaming segment missed expectations with revenue of $843 million against a forecast of $855 million.

Advanced Micro Devices (AMD) saw its stock drop more than 16% on Wednesday, even after it surpassed Q4 expectations, raised guidance, and reported growth in its key businesses, as investors reacted to what some considered modest projections compared to high anticipation.

Q4 Results Top Forecasts But Disappoint Market Hopes

AMD posted Q4 earnings per share of $1.53 on $10.3 billion revenue, exceeding estimates of $1.32 and $9.6 billion, respectively. The company’s revenue rose from $7.7 billion in the same period last year, showing strong year-over-year growth. However, investors appeared to want even higher beats given the stock’s sharp rally over the past year.

The stock had climbed over 112% in the last 12 months, outpacing Nvidia’s 54% growth during that same period. Expectations were high as many expected AMD to capture more market share from Nvidia in AI and data center segments. While AMD delivered strong numbers, market response indicated it fell short of loftier hopes.

In the data center segment, AMD reported $5.4 billion in revenue, above expectations of $4.97 billion. The PC client unit generated $3.1 billion versus projections of $2.9 billion, also beating estimates. Its gaming division reported $843 million, just under the $855 million analysts expected.

AMD Stock Drops as Guidance Fails to Satisfy Lofty Expectations

Despite raising its Q1 forecast, AMD stock declined sharply following the earnings release. The company said Q1 revenue would range between $9.5 billion and $10.1 billion. While this guidance beat the consensus estimate of $9.4 billion, investors had hoped for numbers exceeding $10 billion.

Advanced Micro Devices, Inc., AMD

Some forecasts predicted results above the top end of AMD’s own range, intensifying pressure on the stock. “We believe we are well-positioned for growth in 2026,” said CEO Lisa Su. Even with a strong outlook, the bar appeared too high for Wall Street enthusiasm to hold.

The drop in AMD stock followed sharp market reactions to other tech earnings, including Microsoft and Meta. Traders responded differently to those reports, cheering Meta but raising concerns over Microsoft’s increased spending. The contrast in reactions highlights how sensitive markets are to future investment narratives.

AMD Unveils New AI Chips and Server Products

At CES 2026, AMD introduced the Helios rack-scale server system, targeting large-scale AI workloads. The Helios system contains 72 GPUs and aims to rival Nvidia’s NVL72 rack, which features similar specs. AMD called it the “world’s best AI rack,” directly challenging Nvidia’s position in the AI infrastructure market.

AMD also showcased its MI500 GPU series, claiming up to 1,000x performance over its previous MI300X chips. This suggests aggressive efforts to capture AI market share from competitors, particularly Nvidia. Su projected the AI data center market to be worth $1 trillion by 2030.

At the event, AMD also announced its new AI PC chips and discussed future plans for the humanoid robotics space. These product announcements align with AMD’s broader strategy to diversify its portfolio. However, growing competition from Amazon, Google, and Microsoft’s custom chips could present challenges.

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