AMD Shares Slide Despite Record Quarterly Performance

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Advanced Micro Devices (AMD) presented its strongest quarterly financial results to date last week, yet investors responded by sending the stock sharply lower. The disconnect highlights how forward-looking guidance can outweigh even the most impressive historical performance. As of Friday, AMD shares were trading near $192, reflecting a drop of approximately 17% since the earnings release. The sell-off was triggered by a cautious outlook for the first quarter of 2026 and mounting concerns regarding export restrictions to China.

For the fourth quarter of 2025, the chipmaker reported record revenue of $10.3 billion, marking a 34% year-over-year increase and surpassing the analyst consensus estimate of $9.67 billion. Profitability also exceeded expectations, with earnings per share coming in at $1.53 against a forecast of $1.32.

The company's data center segment remained the primary growth engine, generating $5.4 billion in revenue—a 39% surge. Strong demand for the MI300 series of artificial intelligence accelerators is cementing AMD's competitive standing in a market long dominated by Nvidia.

However, the initial forecast for Q1 2026 disappointed the market. Management projected revenue of around $9.8 billion, representing a sequential decline of roughly 5%. This figure fell notably short of the more optimistic "whisper numbers" circulating on Wall Street.

Export Controls and Product Transition Create Headwinds

CEO Lisa Su pointed to specific challenges ahead. Revenue from AI chip sales in China is expected to collapse from $390 million in Q4 to just $100 million in Q1 due to newly enforced export controls. Licensing complications are further hindering distribution in the region.

Compounding these issues is an upcoming product transition. The next-generation GPU architecture, codenamed "Helios" (MI455X/Zen 6), is not scheduled for launch until the second half of 2026, likely in the third quarter. This anticipated gap is weighing on expectations for the first half of the year.

Diverging Views from Market Analysts

Equity researchers offered mixed reactions in the wake of the report. On February 3, Bank of America reaffirmed its Buy rating and raised its price target to $280. Analyst Vivek Arya cited an expected 35% growth rate for server CPUs in 2026. Conversely, Morgan Stanley reduced its target to $255, though it maintained a positive long-term view.

In a notable move, Ark Invest capitalized on the stock's weakness to increase its position. Cathie Wood's investment firm purchased over 141,000 AMD shares on February 4, signaling a conviction in the long-term AI narrative despite near-term volatility.

Market attention is now firmly fixed on the performance of AMD's server CPU business in the first half of 2026. Should the company meet or exceed its projections in this segment, the recent pressure on its share price could begin to ease.