AMD (AMD) was in the spotlight on Wednesday after the semiconductor giant reported fourth-quarter results and guidance that were better-than-expected. However, a number of Wall Street firms had questions about the figures and said they were “not as positive as the print looked.”
Shares fell 9% in premarket trading, while competitor Nvidia (NVDA) was fractionally positive.
Wedbush Securities analyst Matt Bryson said the fourth-quarter data center revenue was aided by nearly $400M in unexpected MI308 revenue from China; however, the guidance calls for $100M in MI308 revenue calls from China, which was puzzling.
“Net, even w/o the benefit of being able to writeup inventory, AMD’s outlook in particular was better than consensus expectations,” Bryson wrote in a note to clients. “At the same time, with growing shortages of CPUs seemingly creating more opportunity to extract incremental value (higher volumes, more optimal mix, and price increases) that wasn’t apparent in results or guidance, we can understand the post print sell-off in shares.” Bryson kept his Outperform rating and $290 price target on AMD.
J.P. Morgan analyst Harlan Sur had a similar take, as he called the results and guidance a “mixed bag,” again referring to the ebb and flow of the China situation.
“So, though Mar-Qtr guidance was also better than expected, the extent to which AMD is able to generate operating leverage remains in question and likely represents an overhang on the stock until this can be satisfactorily demonstrated (most likely 2H26), especially in light of risk to gross margins with the upcoming ramp of MI450/Helios later this year,” Sur wrote in a note to clients. He reiterated his Neutral rating and $270 price target on the stock.
Regarding the China situation, AMD management—led by CEO Dr. Lisa Su and CFO Jean Hu—said it’s a dynamic situation. The near $400M in revenue from China was from a license that was approved by the Trump Administration from orders “very early” in 2025, Su explained.
“And so we saw some revenue in Q4, and we’re forecasting for about $100 million of revenue in Q1,” Su added. “We are not forecasting any additional revenue from China just because it’s a very dynamic situation. So given that it’s a dynamic situation, we’re still waiting for—we’ve submitted licenses for the MI325, and we’re continuing to work with customers and understanding sort of their customer demand. We thought it prudent not to forecast any additional revenue other than the $100 million that we called out in the Q1 guide.”
Morgan Stanley analyst Joseph Moore said he was “surprised” at the weakness in the stock after the results, “as the numbers were quite good and AMD said the right stuff about the new products.”
“We thought that the stock would trade up on good results; we got good results, but apparently expectations were higher, so we were wrong about that,” Moore wrote in a note. “In some sense the ‘CPUs in shortage’ might create some expectations of memory type of upside, but this is not a commodity product and the impact is less immediate. But servers growing double digits in 1Q in what is normally a seasonally weak period is a very strong indication for the year, and AMD hitting majority share in many cloud-based markets is very positive down the road.”
Moore continued: “AI remains less certain; we are excited to see what AMD can bring with its rack scale products but penciling in CoWoS #s as revenue seems overly optimistic, and our customer checks lean optimistic but ultimately are a little bit inconclusive, as customers need to test the racks to gauge their enthusiasm. We still believe that we are in a very strong investment phase for AI hardware, which should help, but in a very competitive market where NVIDIA and the ASIC vendors are all moving quickly, we will need to see a very strong MI400 offering next year for AMD to cement that position.”
He reiterated his Equal-Weight rating but lowered his price target to $255 from $260.
GF Securities analyst Jeff Pu reiterated his Buy rating despite the weakness in the stock.
“Compared [to] earlier market concern of the MI455 schedule risk, [management] stated that the MI455/Helios rack is developing well on track, with doing parallel testing with customers,” Pu wrote in a note. “Additionally, [management] indicated the first MI455 project with OpenAI is also on track and expects another MI455 multi-year customer to be added by [the] end of this year. In our view, we continue to expect a robust customer pipeline of MI455X and a potential upside seen in Meta’s demand due to the progress risk of Meta’s ASIC especially Iris.”