AMD’s China concerns overshadow upbeat sales forecast for AI

[SAN FRANCISCO] Advanced Micro Devices (AMD), the second-largest maker of artificial intelligence (AI) processors, said that the chipmaker’s return to the crucial China market is difficult to predict, overshadowing a generally upbeat forecast for its AI business.

As part of its quarterly earnings report on Tuesday (Aug 5), AMD declined to predict Chinese sales of the Instinct MI308, an AI processor that the company designed for the Asian country. The uncertainty weighed on the shares, sending them down about 5 per cent in extended trading.

The Trump administration had barred shipments of such chips to China in April, though it reversed course last month, raising hopes that AMD and rival Nvidia could soon resume sales. China is the largest market for semiconductors, and the restrictions have threatened to erase billions of US dollars in total revenue from both companies.

“As our licenses are still under review, we are not including any MI308 revenue in our third-quarter guidance,” chief executive officer Lisa Su said on a conference call with analysts.

Su was optimistic about the overall market for AI computing. “Looking ahead, we see a clear path to scaling our AI business to tens of billions of US dollars in annual revenue,” she said during the call. The company is also ramping up its new MI350 lineup, she said.

The shares had gained 44 per cent in 2025 through the close, making AMD the best-performing stock in the semiconductor industry.

Three months ago, AMD said that it was taking US$800 million in writedowns related to the Chinese export restrictions and warned that the curbs would cost it US$1.5 billion in revenue this year.

Wall Street has been waiting for guidance on how that has changed, given the US policy shift.

On the conference call, analysts repeatedly asked for a specific outlook on how much China AI revenue the company will get and when. They also tried to get Su to commit to long-term predictions for overall AI chip revenue.

But Su and chief financial officer Jean Hu stuck to their message: While the executives are confident about the AI market, the specifics remain difficult to forecast. Earlier writedowns of Chinese inventory cannot be converted into revenue because they involved incomplete chips that will require further manufacturing work, they said.

Despite the uncertainties, AMD’s third-quarter revenue forecast easily cleared analysts’ estimates. The sales will be about US$8.7 billion, the company said, compared with an average projection of US$8.4 billion.

Second-quarter sales rose 32 per cent to US$7.7 billion, compared with a US$7.4 billion average estimate. Profit was 48 US cents a share, minus certain items. Analysts projected 49 US cents. Data centre sales gained 14 per cent to US$3.2 billion in the period. On average, analysts had predicted US$3.3 billion. Personal computer (PC)-related sales climbed 67 per cent to US$2.5 billion. The average prediction was US$2.6 billion.

In the decade since Su took the top job at AMD, the company has become a key provider of technology across the computing industry. The ability to deliver competitive products, at a time when longtime nemesis Intel has stumbled, has brought a reversal of fortunes.

AMD’s market capitalisation is now roughly US$200 billion higher than Intel’s. Still, neither company has matched the runaway success of Nvidia, whose dominance of AI accelerators has made it the world’s most valuable business.

AMD is the second-biggest provider of graphics chips, which form the basis for the AI accelerators that run in data centres. Its microprocessors, meanwhile, go head to head with Intel products in the markets for PCs and servers. BLOOMBERG