AMD Shares Dip Despite Record Quarterly Performance

AMD US0079031078

Advanced Micro Devices, Inc. (AMD) reported financial results for the fourth quarter of 2025 that shattered previous records and comfortably exceeded Wall Street's forecasts. However, investor sentiment turned negative in after-hours trading, with the stock declining. The primary concern centered on the company's forward guidance for the current quarter, which some market participants viewed as cautious given the ongoing artificial intelligence investment boom.

The semiconductor giant announced Q4 2025 revenue of $10.27 billion, representing a 34 percent year-over-year increase and surpassing the average analyst estimate of $9.67 billion. On a non-GAAP basis, earnings per share came in at $1.53, significantly higher than the consensus projection of $1.32.

When measured by GAAP standards, net income soared to $1.51 billion. This figure marks a dramatic 213 percent jump from the $482 million reported in the same quarter last year. For the full 2025 fiscal year, AMD achieved record annual revenue of $34.6 billion, a 34 percent gain compared to 2024.

Key Fourth-Quarter Financial Metrics:

• Revenue: $10.27 billion (+34% year-over-year)
• Non-GAAP Earnings Per Share: $1.53 (+40% year-over-year)
• Non-GAAP Gross Margin: 57 percent
• Data Center Segment Revenue: $5.4 billion (+39% year-over-year)

Data Center Division Powers Growth

The Data Center business emerged as the most powerful growth engine. Segment revenue for the quarter reached $5.4 billion, a 39 percent increase from the prior year. This performance was fueled by robust demand for the company's EPYC server processors and continued momentum for its Instinct series of GPUs designed for AI workloads.

Over the entire year, the Data Center segment posted record revenue of $16.6 billion, growing 32 percent. AMD's Client and Gaming segments also showed strength. Combined revenue for Q4 was $3.9 billion, up 37 percent. The Client business, driven by Ryzen processors, contributed $3.1 billion, while Gaming revenue was $843 million.

Guidance Falls Short of Elevated Hopes

Looking ahead, AMD provided revenue guidance for the first quarter of 2026 of approximately $9.8 billion, plus or minus $300 million. While this midpoint forecast exceeds the current analyst consensus of $9.38 billion, it fell short of the more optimistic projections held by some researchers who anticipated a larger boost from massive AI infrastructure investments.

The guidance midpoint implies a year-over-year growth rate of roughly 32 percent. However, it also indicates a sequential decline of about five percent from the stellar fourth quarter. The company expects its non-GAAP gross margin to be approximately 55 percent. Upcoming quarterly reports will reveal whether AMD can maintain the momentum established in 2025.

China Segment Faces Headwinds

A notable pressure point is the company's business in China. In Q4 2025, AMD generated approximately $390 million in revenue from sales of its Instinct MI308 accelerators in the Chinese market. For the current first quarter, management anticipates this figure will drop to only about $100 million. This anticipated decline is a direct consequence of tightened U.S. export controls on advanced computing chips.