AMD Earnings: Data Center Demand Still Looks Quite Strong to Us

Key Morningstar Metrics for Advanced Micro Devices

• Fair Value Estimate: $270
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: Very High

What We Thought of Advanced Micro Devices’ Earnings

Advanced Micro Devices AMD reported fourth-quarter revenue of $10.3 billion, up 34% year over year, up 11% sequentially, and ahead of guidance. AMD’s first-quarter revenue forecast of $9.8 billion is ahead of FactSet consensus estimates and would represent 32% growth year over year.

Why it matters: AMD received a revenue boost of $390 million from previously-banned MI308 chip sales into China. Still, AMD’s core data center chip business fared well with sequential growth in artificial intelligence accelerators (GPUs) and strong demand for x86 server processors (CPUs) for traditional workloads.

• AMD reiterated its long-term financial targets, first provided at its November 2025 analyst day, calling for a 35% revenue compound annual growth rate over the next three to five years. Within, AMD still expects a 60% CAGR in data center revenue, aiming for $100 billion by 2030 versus $16.6 billion in 2025.

The bottom line: We maintain our $270 fair value estimate for narrow-moat AMD. Shares sold off about 7% after hours, and like the selloff in Intel’s shares after earnings, our best guess is that investors may have been too optimistic about the revenue growth seen in server CPUs.

• Medium-term concerns about OpenAI’s expansion are still likely an overhang on AMD’s stock, but it appears that the hard work is being done to bring AMD’s MI450 products to OpenAI this year, starting in the third quarter, with meaningful revenue arriving in the fourth quarter.

Coming up: By end market, on a sequential basis, AMD expects first-quarter revenue growth in data center but declines across client (PCs), gaming, and embedded, the latter three of which typically face seasonal first-quarter declines.

• AMD hinted that server CPU revenue will grow sequentially, which is stronger than normal seasonal patterns. GPU revenue should also rise sequentially, but we suspect this growth will be moderate, given the one-time boost in the previous quarter from MI308 revenue sold into China.