Advanced Micro Devices (AMD) shares slumped in after-hours trading even as the company reported second-quarter results that beat Wall Street expectations, driven by strong demand for its chips as technology companies continue expanding data-centre capacity to power AI applications.
The stock is down nearly 9% down in extended trading from its previous close of $518.58 on Tuesday. The chipmaker’s shares have nearly tripled over the past year as investors have bet that AMD’s ‘Instinct’ AI chips can win a meaningful share of the fast-growing market from Nvidia.
Data centre business powers AMD’s growth
AMD’s revenue rose 50% year-on-year to $11.54 billion, beating the estimate of $11.28 billion. Meanwhile, its adjusted profit of $1.66 per share also surpassed the estimate of $1.62, news agency Reuters reported.
The company’s strong performance was attributed to continued strength in its Data Center segment. Revenue from this unit stood at $6.7 billion, up 107% on an annual basis, which the company attributed to central processing unit and graphics processing unit sales.
AMD said it expects about $13 billion in revenue for the current quarter, plus or minus $300 million, compared with LSEG expectations of $12.52 billion. However some analysts had been looking for guidance as high as $14 billion, according to a report by CNBC. The sharp after-hours decline in the stock suggests that investors were expecting an even stronger outlook.
Another important development is that SpaceX will build its future artificial intelligence infrastructure exclusively on Nvidia systems and plans to begin launching Nvidia-powered Starmind compute satellites in 2027, chief executive officer Elon Musk told investors on August 4 during the AI-to-rocket firm’s first earnings call as a listed entity.
AMD’s forecast to challenge Nvidia’s dominance
In July, AMD raised its estimate for the global semiconductor industry, saying the market could be worth $2 trillion per year by 2028. The chipmaker expects $1.4 trillion of that opportunity to come from AI accelerators, or GPUs, up from a previous estimate of $500 billion by 2028, CNBC reported.
“We expect Data Center sales to accelerate in the second half of 2026, driving stronger overall revenue growth and continued earnings expansion,” AMD CFO Jean Hu said in a statement.
On an earnings call with analysts, AMD CEO Lisa Su said that the company expects its data center sales to double in 2027, and that server revenue will up more than 80% on an annual basis in the second half of the company’s fiscal 2026.
The forecast suggests that AMD is becoming more confident about the growth of the AI chip market. It also indicates that the company’s investments to compete with Nvidia are beginning to show results, with strong growth in its data-centre processor business during the second quarter.
AMD secures major deals
The chipmaking company has also secured major customers and infrastructure agreements in recent months.
In July, AMD signed a major deal with Anthropic, in which it agreed to sell tens of billions of dollars worth of AI servers powered by up to 2 gigawatts of MI450 chips from early 2027, and invest up to $5 billion in the IPO-bound Claude maker, subject to certain deployment milestones.
A week ago, AMD also secured access to up to 2.5 gigawatts of data-center capacity through a deal with Core Scientific. As part of the agreement, AMD received warrants to purchase the company’s stock, Reuters reported.
(With wire inputs)
