Chipmaker beats forecasts, raises outlook despite regulatory headwinds and slowdown in gaming
Advanced Micro Devices (NASDAQ: AMD) has posted stronger-than-expected first-quarter earnings, powered by surging demand for AI and data center chips, and offered a bullish outlook despite a regulatory drag on gross margins.
Revenue for the March quarter rose 36% year-on-year to US$7.44 billion, ahead of consensus estimates of US$7.13 billion. Adjusted earnings per share came in at 96 cents, also above forecasts of 94 cents. Shares rose more than 4% in after-hours trading following the announcement.
Net income for the quarter was US$709 million (44 cents per share), up from US$123 million (7 cents) in the prior year. On a non-GAAP basis, net income reached US$1.6 billion.
CEO Dr. Lisa Su said AMD had delivered “an outstanding start to 2025,” with the fourth consecutive quarter of accelerating year-over-year growth. “Despite the dynamic macro and regulatory environment, our first quarter results and second quarter outlook highlight the strength of our differentiated product portfolio and consistent execution.”
Data centre strength leads the charge
AMD’s standout performer was its data centre segment, which posted revenue of US$3.7 billion—up 57% from a year earlier and above analyst estimates. The gains were attributed to strong sales of AMD’s EPYC server processors and Instinct AI GPUs, which are seen as AMD’s primary competitive offerings against market leader Nvidia in the high-performance AI chip space.
The company disclosed US$5 billion in AI GPU sales for FY2024, and highlighted continued demand from hyperscalers such as Oracle Cloud Infrastructure and Google Cloud, which are expanding their deployment of EPYC CPUs.
Recent AI-related wins included a strategic partnership with Core42 to deploy AMD Instinct GPUs in France’s emerging AI infrastructure, support for Meta’s Llama 4 models via AMD’s ROCm software, and a new AI-focused telecom platform with Cisco, Jio, and Nokia.
Client segment rebounds, but gaming lags
AMD’s client and gaming segment delivered US$2.9 billion in revenue, up 28% from a year earlier. Client revenue—mainly from laptop and PC processors—rose 68%, driven by strong uptake of the Zen 5-based Ryzen chips launched last summer.
In contrast, gaming revenue fell 30% to US$647 million due to a decline in semi-custom console chip sales. AMD recently launched the Radeon RX 9070 series and FidelityFX Super Resolution 4 to bolster its graphics offerings, but console refresh cycles remain a headwind.
The embedded segment, including products from the Xilinx acquisition, posted US$823 million in revenue, down 3% year-over-year amid mixed end-market demand.
Gross margin impacted by export controls
Despite the revenue beat, AMD’s guidance for Q2 gross margins came with caveats. The company expects around US$7.4 billion in Q2 revenue, in line with Q1, but projected a non-GAAP gross margin of 43%—down from 54%—due to an estimated US$800 million in charges stemming from U.S. export restrictions on certain AI chips.
Excluding these charges, gross margin would have remained at 54%, underscoring the impact of geopolitics on AMD’s fast-growing AI hardware business.
CFO Jean Hu noted that AMD was continuing to invest in R&D and go-to-market initiatives “positioning the company for long-term growth and value creation.”
Outlook
AMD reiterated full-year confidence in strong growth across data centre, AI, and client markets, and said it expects Q2 revenue of approximately US$7.4 billion, plus or minus US$300 million. Gross margin is expected to recover once inventory charges subside, barring further regulatory action.
With AI chip demand accelerating and new partnerships in key markets—including telecom, public cloud, and scientific computing—AMD appears well-positioned to gain further ground in 2025, despite ongoing challenges in the gaming segment and uncertainty from U.S. export controls.
