AMD Reports Better-Than-Expected Q1 Earnings, Showing Strength of Its AI Chip Business

AMD reported better-than-expected first-quarter earnings on Tuesday, showing the strength of its AI chip business. The company continues to perform well despite regulatory challenges from export controls.

AMD reported better-than-expected first-quarter earnings on Tuesday, highlighting the strength of its AI chip business and ability to perform well despite regulatory challenges from export controls.

The chip maker turned in adjusted earnings per share of $0.96 on revenue of $7.4 billion. Analysts polled by had projected EPS of $0.94 on revenue of $7.1 billion.

Compared to the same period last year, when AMD reported earnings per share of $0.78 on revenue of $5.4 billion, earnings more than doubled and revenue increased substantially.

AMD’s Data Center segment was a star performer, with revenue in this division surging by 57% to $3.7 billion compared to the prior year. This segment includes AMD’s high-performance CPUs and GPUs, which are used in servers and other data center equipment.

“Despite the dynamic macro and regulatory environment, our first-quarter results and second-quarter outlook highlight the strength of our differentiated product portfolio, and we are executing well on our roadmap to deliver leadership products in 2024,” AMD CEO Lisa Su said in the release.

Export Control Challenges

The strong results come despite significant headwinds from government regulations. During the earnings call, AMD’s CFO stated that export controls would reduce the company’s revenue by $1.5 billion this year.

These challenges stem from the Trump administration’s tighter restrictions on AI chips destined for China. The rules effectively cut off AMD’s ability to ship its MI308 AI processor to the region.

In April, AMD disclosed it would take a charge of up to $800 million related to inventory and purchase commitments affected by these export control license restrictions.

Despite these obstacles, AMD remains optimistic about offsetting the regulatory impact through its product differentiation.

“We are focused on mitigating the impact of export controls, leveraging our broad product portfolio and technology to provide optimal solutions for customers in each region,” Su added.

Stock Response and Key Averages

The stock’s initial response to the earnings was strongly positive, with AMD shares rising as much as 7% in late trading following the release.

However, the stock pared some gains during the conference call when executives elaborated on the export control implications. Premarket trading on Wednesday showed the stock up 2.7%.

For the second quarter, AMD provided a revenue outlook ranging from $7.1 billion to $7.7 billion, with the midpoint of $7.4 billion exceeding analyst expectations of $7.2 billion.

Its Client segment, which encompasses laptop and desktop chips, generated revenue of $2.3 billion, surpassing analyst projections of $2 billion. This figure also marks a significant increase from $1.3 billion in Q1 last year.

AMD’s gaming business brought in $647 million versus expectations of $540 million, although this segment faces challenges as console life cycles mature.

Both Sony and Microsoft’s gaming consoles are entering the second half of their life cycles, typically leading to a decline in sales compared to launch periods.

Console manufacturers have also begun raising prices in response to tariffs. Microsoft announced a $100 price increase for its Xbox Series X, now priced at $599, while Sony has increased PlayStation prices in Europe.

AMD’s share performance this year reflects broader trends in the semiconductor sector. The stock is down about 18% year-to-date as of Tuesday’s close, compared with a 13% decline for the iShares Semiconductor ETF.

The AI chip market has faced pressure in recent months amid concerns over the sector being overhyped. Additionally, developments like DeepSeek’s January announcement that it produced high-performance AI models using less than top-tier chips have raised questions about future demand.

The company competes directly with Intel, which also recently reported better-than-expected earnings but provided lighter guidance for Q2. Nvidia, another major competitor, is scheduled to report earnings on May 28.

PC manufacturers, which use AMD chips, are facing challenges from a 145% tariff on products made in China. While computers are currently exempt from Trump’s tariffs, the administration has indicated it might implement duties on semiconductors based on the Commerce Department’s investigation.

Despite these macroeconomic and regulatory challenges, AMD’s latest results highlight the company’s ability to execute effectively in a complex environment, positioning it well for continued growth throughout 2025.