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Shares of Advanced Micro Devices (AMD-7.25%) tumbled more than 10% on Wednesday morning, hitting a new 52-week low despite the semiconductor giant exceeding revenue expectations in its latest earnings report. The shares were trading at $108 each in the morning.
In its fourth-quarter earnings report released Tuesday, the Santa Clara-based chipmaker posted mixed results. Net income was $482 million, down 28% from $667 million a year earlier. Gaming segment revenue dropped significantly, falling 59% year-over-year to $563 million.
But revenue came in at $7.66 billion, exceeding the anticipated $7.53 billion. The company reported adjusted earnings per share of $1.09, slightly surpassing analysts’ expectations of $1.08.
AMD projected total sales of $6.8 billion to $7.4 billion for the current quarter, compared to analysts’ average estimate of $7.04 billion.
Although AMD lags behind its rival Nvidia (NVDA+4.29%) in selling chips for data centers, its data center unit has become the company’s most crucial business segment. Recent growth has been driven by rising demand for its graphics processing units (GPUs) used in artificial intelligence. In the latest quarter, AMD reported $3.86 billion in data center sales, marking a 69% year-over-year increase.
“Data Center segment annual revenue nearly doubled as EPYC processor adoption accelerated and we delivered more than $5 billion of AMD Instinct accelerator revenue,” said AMD Chair and CEO Dr. Lisa Su.
The company, which has been struggling with costs, reduced its global workforce by 4% in November 2024 in an attempt to focus on competing in the AI chip market. In January, AMD introduced new AI PC and gaming processors at the Consumer Electronics Show. The new Ryzen AI Max Series chips are designed for high-performance computing in “thin and light notebooks.”