- AMD shares rose 5%, outperforming NVIDIA in recent trading.
- AMD agreed to give the U.S. government 15% of its AI GPU sales in China for export licenses.
- Analysts say the 15% payment mainly affects low-margin chips and has minimal impact on profits.
- Forecasts predict rising AI chip sales for AMD, with revenue projected at $6.2 billion in 2025 and $9.9 billion in 2026.
- Recent earnings showed record revenue for AMD but lower profit due to a large inventory write-down linked to export controls.
Advanced Micro Devices (AMD) stock surged by 5% during the latest trading session, surpassing gains seen in Nvidia shares. The move follows news that AMD will give the U.S. government 15% of its sales from Artificial Intelligence (AI) graphics processing units (GPUs) in China in exchange for export licenses.
According to analysts cited this week, the agreement with U.S. authorities mostly targets lower-profit products like the MI308X GPU. Citi analyst Christopher Danely stated the deal will have little impact on AMD’s overall profits, as these chips contribute less to the company’s average profit margin, which stands at nearly 54%.
Danely highlighted that the higher-margin GPUs in the MI355 and upcoming MI400 families are expected to drive most of AMD’s AI revenue growth. He forecasts AI sales reaching $6.2 billion in 2025, a 23% increase, and $9.9 billion in 2026, a 58% rise. He also noted the MI400 series will be AMD’s first rack-scale AI server chip, potentially making the company a stronger competitor to Nvidia’s established products.
The MI400 series, which includes the MI450, is designed to be used in large data centers and features 72 processors. This step could help AMD increase its presence in the AI hardware sector, though Nvidia’s Blackwell chips continue to dominate the market. According to a recent analyst report, 73% of 56 analysts surveyed recommend buying AMD stock, while 27% advise holding.
AMD’s latest earnings report showed strong revenue of $7.7 billion, pushed by demand for EPYC and Ryzen processors in cloud and enterprise markets. However, earnings per share fell to $0.48 from $0.69 last year. The decline was due in part to an $800 million inventory write-down, related to tighter export controls for Chinese AI chips. This charge reduced gross profit margin to 43% from 53% the previous year, a development closely watched by investors.
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