On Tuesday, Advanced Micro Devices Inc (NASDAQ: AMD) revealed its financial results for the fourth quarter, unveiling figures that surpassed analyst expectations despite an ensuing dip in its stock price during after-hours trading. The semiconductor manufacturer reported a 34% year-over-year increase in quarterly revenue, reaching $10.27 billion and outperforming the anticipated $9.67 billion figure. Adjusted earnings per share (EPS) also exceeded market estimates, recording $1.53 against the expected $1.32.
The company segmented its revenue to highlight core growth areas. The Data Center division generated $5.4 billion, marking a 39% increase compared to the prior year. The Client and Gaming segment contributed $3.9 billion, which is a 37% year-over-year rise. The Embedded segment added $950 million, reflecting a more modest 3% growth. These segments collectively underpin the company’s comprehensive expansion in various market verticals.
Operating income for the quarter stood at $1.8 billion, and total cash and cash equivalents amounted to approximately $5.54 billion. Lisa Su, chair and CEO of AMD, emphasized the significance of 2025 as a milestone year characterized by record-breaking revenue and earnings. She credited this achievement to strong execution and widespread demand for AMD's high-performance computing and AI platforms.
Looking ahead, AMD projects first-quarter 2026 revenue around $9.8 billion, with a possible variation of plus or minus $300 million. This forecast notably includes an estimated $100 million from sales of the AMD Instinct MI308 product to China. Market analysts currently anticipate first-quarter revenue closer to $9.39 billion, suggesting AMD's guidance is above consensus estimates.
The CEO also highlighted accelerating adoption of AMD’s EPYC and Ryzen central processing units (CPUs), alongside rapid expansion within the company's data center AI segment. These elements underpin a positive growth trajectory for the upcoming year amid intensifying AI demand.
Despite the upbeat earnings report, AMD’s stock experienced a decline of approximately 3.56% in after-hours trading, priced at $233.50 at the time of reporting. This price movement contrasts with the stock’s substantial annual gain exceeding 100% leading up to the earnings announcement, underscoring investor caution following the earnings release.
Financial investors and market watchers await further insights during AMD's scheduled earnings call, set for 5 p.m. Eastern Time, where the management team is expected to provide additional context and address questions related to the quarterly results and business outlook.
AMD’s fourth-quarter performance, driven by significant contributions from AI-related product demand, reinforces its strategic positioning in high-performance computing sectors. The company’s financial strength, reflected in strong revenue growth, considerable operating income, and healthy cash reserves, indicates solid operational execution.
However, the immediate negative stock price reaction after the earnings announcement suggests that investors may be weighing various factors beyond top-line growth. These may include profit margins, supply chain dynamics, or market expectations about AI technology proliferation and competitive pressures, though such assessments will be clarified in forthcoming investor communications.