AMD stock drops nearly 10% on earnings as AI data center business disappoints. Meanwhile, Nvidia pops

Advanced Micro Devices (AMD) stock (NASDAQ: AMD) fell 9% before the bell on Wednesday after the company fell short on sales for its data centers, despite reporting better-than-expected fourth-quarter earnings. (The stock is down 7% as of midday Wednesday.)

That’s because the chipmaker’s core business is selling data center chips for graphics processing units used to power AI. It’s currently going head-to-head with Nvidia for market share of the lucrative, high-powered AI chip market.

Shares in Nvidia (NVDA), meanwhile, were up 4% in midday trading Wednesday after Google’s parent company, Alphabet, announced it will spend $75 billion in expected capital expenditures in 2025, a majority of which will go into building data centers and servers in an effort to help Google increase its AI capabilities.

On Tuesday, AMD reported Q4 revenue that came in at $7.66 billion, beating estimates of $7.54 billion, and an adjusted earnings per share (EPS) of $1.09. Looking ahead to the first quarter of 2025, the chipmaker forecast revenue coming in between $6.8 billion and $7.4 billion.

On its earnings call with investors, CEO Lisa T. Su told investors the company sees “strong double-digit percentage revenue and EPS growth” for 2025, calling 2024 “a transformative year for AMD . . . successfully established our multibillion-dollar data center AI franchise, launched a broad set of leadership products, and gained significant server and PC market share.”

Also on Wednesday, Truist Securities analyst William Stein reduced the company’s price target to $130 a share, down from $145. At the time of this writing, AMD stock was trading at $109.58, near its 52-week low.