AMD's 2026 First Quarter Targets Weak: Details Here

AMD's Fourth Quarter Performance in 2025 and Weak Forecasts

Leading chip manufacturer Advanced Micro Devices (AMD) presented impressive financial data during its fourth quarter earnings call for 2025. The company achieved revenues of $10.3 billion, representing a 34% increase. This growth was driven by strong performance in the Data Center and Client & Gaming units, as well as a $390 million sale of the MI308 to China.

Financial Developments and Gross Margin Increase

AMD increased its gross margin to 57%, marking a significant gain. Additionally, the company's operating income reached $2.9 billion, while free cash flow totaled $2.1 billion. At the end of the period, cash and short-term investments were recorded at $10.6 billion. Meanwhile, the operating income for the Data Center unit was $1.8 billion.

CEO Lisa Su's Statements

CEO Lisa Su emphasized the broad demand for high-performance computing and artificial intelligence products. The Data Center revenue reached $5.4 billion, up 39% year-over-year, driven by the widespread use of the Instinct MI350 Series GPUs. Furthermore, the countdown to the introduction of the MI400 series and the Helios platform has begun.

First Quarter Expectations

Management has set a revenue estimate of $9.8 billion for the first quarter of 2026. However, some analysts believe this estimate may surpass Wall Street expectations of $9.38 billion. A 32% year-over-year increase in revenue is anticipated. Nevertheless, a 5% quarter-over-quarter decline is expected due to seasonal effects.

Long-Term Expectations and Risks

AMD targets a compound annual growth rate of over 35% over the next 3-5 years. However, challenges are noted due to uncertainties in the Chinese market, inflation in memory costs, and a maturing gaming console cycle. Management expresses confidence in its supply chain and supply matters.

In conclusion: Despite AMD's strong performance in 2025, 2026 expectations are seen as weak by some analysts. The company draws attention with its growth targets in the artificial intelligence and Data Center sectors.