MW Here's how AMD plans to withstand the deepening U.S.-China trade war
8:18 PM ET 5/6/25 | MarketWatch
By Britney Nguyen
The chip maker expects 'strong growth' this year despite the uncertain macroeconomic and regulatory environment
Advanced Micro Devices Inc. said it plans to withstand new export controls on China with its growing portfolio of products.
During the company's fiscal first-quarter earnings call on Tuesday, AMD Chief Executive Lisa Su said the company thinks the "dynamic" macroeconomic environment and new restrictions on its Instinct MI308X sales to China "are more than offset by the powerful tailwinds from our leadership-product portfolio."
Su said the company still expects to deliver double-digit-percentage revenue growth this year based on share gains with its "Zen 5" Epyc and Ryzen central processing units, as well as its Radeon graphics processing units. The company also plans to ramp up production of its Instinct MI350 accelerators in the second half of 2025, Su said.
"We view the current environment as a strategic opportunity to further differentiate AMD as we deliver an expanding product portfolio that combines leadership compute and AI capabilities for data centers, edge, PCs and embedded end devices," Su said.
After a tough stretch for the chip maker's stock this year, the company on Tuesday announced first-quarter earnings results that were above Wall Street's expectations.
The chip maker reported $7.4 billion in revenue for the March quarter - a 36% increase from the previous year, and above expectations for $7.1 billion, based on analysts' estimates compiled by FactSet. AMD reported adjusted earnings of 96 cents a share, while Wall Street was expecting 94 cents a share.
AMD's stock (AMD) rose 1.8% in after-hours trading Tuesday.
In its data-center segment, the company reported revenues of $3.7 billion, while investors were expecting $3.5 billion, according to FactSet. Data-center revenue grew 57% from a year ago, mostly due to sales of its Epyc CPUs and Instinct GPUs, the company said.
"We delivered an outstanding start to 2025 as year-over-year growth accelerated for the fourth consecutive quarter, driven by strength in our core business and expanding data-center and AI momentum," Su said in a statement.
Su addressed the current macroeconomic and regulatory environment, saying the company's first-quarter results and its expectations for the second quarter "highlight the strength of our differentiated product portfolio and consistent execution positioning us well for strong growth in 2025."
The company set its second-quarter revenue guidance at $7.4 billion, plus or minus $300 million - higher than Wall Street's expectations of $7.2 billion.
AMD's client-segment revenue was up 68% from the previous year to $2.3 billion on strong demand for its Zen 5 Ryzen chips. Its gaming-segment revenue came in 30% lower at $647 million, however, "primarily due to a decrease in semicustom revenue," the company said.
Shares of AMD closed down by almost 2% on Tuesday, and are down by around 18.2% so far this year.
The company said it expects June-quarter adjusted gross margins to be around 43%, counting $800 million in charges related to the required licenses under new U.S. export controls on sales of its MI308X chips to Chinese customers.
-Britney Nguyen
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
> Dow Jones Newswires
May 06, 2025 20:18 ET (00:18 GMT) |
