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AMD’s revenue forecasts below expectations
Advanced Micro Devices (AMD) recently announced a revenue forecast for the fourth quarter that surprised analysts negatively. The company expects to generate around 7.5 billion dollars, a value lower than the average estimate of 7.55 billion dollars. This decline led to a decrease in shares of more than 7% in the aftermarket, highlighting concerns about slower than expected growth in the artificial intelligence (AI) sector
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Growth in AI accelerator sales
Despite disappointing forecasts, AMD announced that sales of AI accelerators are exceeding expectations. The company expects to generate more than $5 billion this year from this segment, up from the previously estimated 4.5 billion. However, some analysts and investors expected an even bigger increase, suggesting that the company may struggle to close the gap with Nvidia, the undisputed leader in
the AI chip market.
Financial results and production challenges
In the third quarter, AMD reported revenues of 6.82 billion dollars, an increase of 18% compared to the previous year, exceeding estimates of 6.71 billion dollars. Earnings per share (EPS), excluding certain items, increased to 92 cents, in line with projections. However, the company faced significant challenges related to the availability of supplies, a common issue in the industry. AMD chose to outsource production to Taiwan Semiconductor Manufacturing Co., which further complicated the situation
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Competition with Nvidia and an uncertain future
AMD’s new MI300 accelerator products, which compete directly with Nvidia’s chips, have been identified as a major driver of revenue growth. However, the company faces stiff competition and growing demand that could exceed current production capacity. With the AI market constantly expanding, AMD is under pressure to improve its performance and meet investor expectations.
