First-quarter revenue guidance of $9.8 billion failed to meet bullish AI-driven expectations.
AMD shares fell more than 6% in extended trading on Tuesday. The drop came even after the company posted stronger fourth-quarter results than analysts expected. Traders focused on the outlook instead of the past quarter. The guidance did not match the mood of an AI-driven market.
The chipmaker reported $10.27 billion in revenue for the quarter ended in December. Analysts had expected $9.67 billion.
Adjusted earnings came in at $1.53 per share, well above the $1.32 estimate. Even with those numbers, the stock sold off fast once the forecast for the next quarter hit the tape.
For the fourth quarter, AMD’s net income rose to $1.51 billion, or 92 cents per share. A year earlier, that figure was $482 million, or 29 cents per share. Total revenue increased 34% year over year, driven by higher sales in data center, client, and gaming products.
On a GAAP basis, revenue jumped from $7.66 billion to $10.27 billion. Gross profit climbed to $5.58 billion, up 44% from the prior year. Gross margin improved to 54%, compared with 51% a year earlier. Operating income reached $1.75 billion, more than double last year’s figure. Operating margin expanded to 17%.
Non GAAP results showed even stronger performance. Gross profit rose to $5.86 billion, and gross margin reached 57%. Operating income increased to $2.85 billion, while non GAAP net income totaled $2.52 billion. Non GAAP earnings per share came in at $1.53, up 40% from last year.
For the first quarter, AMD said it expects revenue of $9.8 billion, plus or minus $300 million. Analysts were looking for $9.38 billion, but some expected a stronger forecast given continued spending on AI hardware. That gap triggered the selloff.
The company operates in a market dominated by Nvidia. AMD remains one of only two major suppliers of large AI-focused graphics processors. Its share of the market is smaller, which keeps pressure on expectations each quarter.
Recent customer wins include OpenAI and Oracle. The company plans to ship its integrated server-scale AI system called Helios later this year. Over the past year, the stock price has more than doubled before this earnings release.
Data center revenue reached a record $5.4 billion in the quarter. That figure was up 39% from the prior year. Growth came from EPYC server processors and Instinct AI GPUs. For the full year 2025, data center revenue totaled $16.6 billion, an increase of 32%.
Client and gaming revenue rose 37% year over year to $3.9 billion. Client revenue alone reached $3.1 billion, driven by demand for Ryzen processors in laptops and PCs. Gaming revenue climbed to $843 million, up 50%, supported by semi-custom chips and Radeon GPU sales. Full-year client and gaming revenue reached $14.6 billion, up 51%.
Embedded revenue grew 3% in the quarter to $950 million. For the full year, embedded sales declined 3% to $3.5 billion due to earlier customer inventory adjustments.
China remained a factor. AMD recorded about $390 million in fourth-quarter sales from Instinct MI308 chips shipped to China. The company also benefited from a $360 million release of previously reserved inventory related to those products. Full-year results included roughly $440 million in charges tied to US export controls.
Across the full year, AMD reported $34.64 billion in revenue. GAAP net income reached $4.34 billion. Non GAAP net income totaled $6.83 billion. The numbers were strong. The forecast was not. That is why the stock dropped.
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