AMD Provides Cautious Outlook Due to Soft Demand for Gaming Chips

Advanced Micro Devices Inc. (AMD) has given a lukewarm revenue forecast for the current period, citing lackluster demand for chips used in video game hardware. The company announced that second-quarter revenue is expected to be approximately $5.7 billion, slightly below the average analyst estimate of $5.72 billion.

Despite the challenges in the gaming division, AMD is optimistic about its push into AI accelerators, similar to Nvidia Corp.’s chips, which are used in developing chatbots and other artificial intelligence tools. The company is projecting that its new MI300 products will generate up to $3.5 billion in revenue this year.

CEO Lisa Su expressed excitement about the industry’s growth, stating, “This is an incredibly exciting time for the industry as widespread deployment of AI is driving demand for significantly more compute across a broad range of markets.”

Following the announcement, AMD shares fell by as much as 6.5% in premarket trading. However, the company’s performance in the first quarter exceeded expectations, with earnings of 62 cents per share and revenue of $5.47 billion.

While AMD faces competition from Intel and Nvidia in various markets, the company is confident in its AI prospects and expects a 6% growth in the current quarter. Despite challenges in the server market, AMD remains focused on expanding its presence in AI and graphics processors.

Investors have shown interest in AMD’s AI initiatives, but the stock has faced pressure from the announcement of a next-generation Nvidia chip. The company’s gross margin for the second quarter is expected to be around 53%, in line with predictions.