AMD's Struggles in AI Chip Market Amid Nvidia Dominance

AMD shares plummeted 13% following a tepid sales forecast that exacerbated concerns over its ability to compete with Nvidia in the AI chip sector. Despite a China sales boost, the company's revenue projections lagged expectations, highlighting challenges in penetrating the thriving AI market dominated by tech giants.

Advanced Micro Devices (AMD) witnessed a 13% decline in its share value on Wednesday, sparked by investor unease following the release of a lackluster sales forecast. This raised doubts about AMD's potential to rival AI chip leader Nvidia.

The company predicted a slight revenue decrease for the current quarter, despite an unexpected boost from resumed sales in China. This underscores AMD's ongoing struggles in the rapidly expanding AI chip market, where Nvidia maintains a formidable presence. The pressure mounts as major tech firms favor custom AI chips, exemplified by Google's multi-billion dollar agreement to supply Anthropic with advanced processors.

The legal plug-in for Anthropic's Claude chatbot, poised to automate routine tasks, spurred a selloff in software stocks that persisted into a second day. AMD forecasted first-quarter revenue around $9.8 billion, marginally above analysts' $9.67 billion estimate, but falling short of the $10.27 billion reported in the previous quarter. Despite China-bound AI chip sales yielding $390 million under a U.S. license for early 2025, the data center segment failed to hit analyst predictions. CEO Lisa Su acknowledged strong future demand for AMD's next-gen AI servers, revealing plans for accelerated shipments to entities like OpenAI.

(With inputs from agencies.)