Chipmaker AMD’s shares dropped by more than 15% on Wednesday after the company posted its Q4 earnings report on Tuesday.
As per a Reuters report, analysts are not bullish on AMD, especially after it lowered guidance on future earnings.
Known for its prowess in gaming and graphics cards, AMD is one of NVIDIA’s fiercest competitors, and current results show it has not captured as much revenue as its peer, especially in data centers and AI chips.
The update comes as both firms continue to compete for market share across the same sectors, such as gaming, AI, and chip exports to China.
Q4 revenue was estimated at $10.3 billion, after which GAAP and non-GAAP estimates differ greatly, due to differences in accounting practices, as per the figures below taken from AMD’s official press release.
GAAP financials
- Gross profit: $5.58 billion
- Gross margin: 54%
- Operating expense: $3.8 billion
- Operating income: $1.75 billion
- Operating margin: 17%
- Net income: $1.5 billion
- EPS: $0.92
Non-GAAP financials
- Gross profit: $5.85 billion
- Gross margin: 57%
- Operating expense: $3 billion
- Operating income: $2.85 billion
- Operating margin: 28%
- Net income: $2.5 billion
- EPS: $1.53
The huge difference in operating income of more than $1 billion comes from AMD not accounting for stock compensation of $486 million, acquisition-related amortization of $557 million, acquisition-related costs of $50 million, and a relatively minor loss contingency of $9 million.
Fourth quarter sales also got a bump from AI chip exports to China—mainly the AMD Instinct MI308, which contributed $390 to top-line earnings.
Despite negative sentiment for the stock, AMD’s CEO Lisa Su seemed extremely optimistic about future prospects, saying, “2025 was a defining year for AMD, with record revenue and earnings driven by strong execution and broad-based demand for our high-performance and AI platforms,”
“We are entering 2026 with strong momentum across our business, led by accelerating adoption of our high-performance EPYC and Ryzen CPUs and the rapid scaling of our data center AI franchise.”
Data center revenue was $5.4 billion, up by 39% on a year-on-year basis on the back of more demand for their AI-focused GPUs. Client and gaming revenue and gaming business revenue was $3.9 billion and $843 million, up by 37% and 50% on a year-on-year basis.
AMD’s embedded segment drew in $950 million in revenue, registering the lowest increase year-on-year of 3%.
“Our record fourth quarter and full-year results demonstrate AMD’s ability to deliver profitable growth at scale,” said AMD CFO Jean Hu.
“We achieved record non-GAAP operating income and free cash flow, while increasing our strategic investments to support long-term growth across our high-performance and adaptive computing product portfolio.”
At the time of writing, AMD shares were trading at $202.80, down by 16.24%.