Recently, AMD released a higher-than-expected financial report for the first quarter of fiscal year 2025, showing that its core business remains resilient. However, the company also warned that full-year revenue is expected to fall by as much as $1.5 billion due to export restrictions.
According to AMD's earnings report, for the quarter ended March 29, the company's adjusted earnings per share were $0.96, beating the consensus estimate of $0.94, and revenue reached $7.44 billion, also higher than the market expectation of $7.13 billion, a year-on-year increase of 36%. Net income jumped to $709 million from $123 million in the year-ago quarter, and earnings per share increased from $0.07 to $0.44.
During the earnings call, AMD CEO Lisa Su said that the company's financial performance exceeded expectations mainly due to the strong growth of the data center business, although the export restrictions on AI chips put some pressure on the company's operations.
Su noted that the U.S. government's export restrictions on advanced AI chips have caused $80 million in direct costs to the company and are expected to cause a further revenue loss of about $700 million in the current quarter. For the full year, AMD expects to lose up to $1.5 billion in potential revenue, mainly affected by shipments of its Instinct MI300X series GPUs to the Chinese market.
Despite the challenges, Su stressed in the conference call: "Our leading portfolio brings strong growth momentum, which will provide a strong hedge against macroeconomic and regulatory uncertainties. She added that despite global tariffs and regulatory pressures, investment at the infrastructure level continues, especially around the application of AI training and inference.
image: AMD's performance exceeded expectations, but full-year revenue is expected to decline by $1.5 billion due to US-China chip export restrictions
In the field of AI, AMD is seen as the closest competitor to Nvidia. The company's fiscal year 2024 AI GPU sales have reached $5 billion. Data center revenue in the current quarter was $3.7 billion, up 57% year-over-year, exceeding market expectations. This growth was mainly due to strong demand for Epyc server processors and Instinct AI GPUs.
According to Su, AMD's AI chips are currently being used to train advanced large models, such as OpenAI's GPT-4 and the R1 model released by Chinese startup DeepSeek, and are being used for inference deployment by a leading AI model developer.
In addition to the data center business, AMD's client and gaming division, which includes notebooks, desktop processors and console chips, generated revenue of $2.9 billion in the quarter, up 28% year-over-year. Among them, benefiting from the strong demand for Zen 5 architecture laptops and desktop chips released last year, the revenue of the client business surged by 68% year-on-year. However, the sales of game chips fell by 30% year-on-year, mainly due to the decrease in game console chip shipments.
AMD's embedded business, primarily from the 2022 acquisition of Xilinx, generated revenue of $823 million, down 3% year-over-year, indicating slightly weaker demand in communications, industrial and other applications.
Overall, despite the challenges faced by AMD due to export restrictions on AI chips, strong data center business growth and extensive customer demand, especially in the generative AI and large model training markets, provide strong support for the company's future growth.
