AMD Shares Drop 5% as First Quarter Revenue Outlook Miss Some Estimates
$Advanced Micro Devices(AMD)$
Revenue for the first quarter of 2026 is forecast at about $9.8 billion, plus or minus $300 million, including about $100 million of AMD Instinct MI308 sales to China, the company said in its earnings release. Analysts' estimates range from $8.32 billion to $10.23 billion, according to data compiled by Bloomberg.
For the fourth quarter ended December, revenue rose to a record $10.3 billion, boosted by shipments to China. While that surpassed the $9.65 billion average estimate by analysts, the figure may not be comparable because the sales to Asian nation may not have been factored into the calculations by Wall Street.
The semiconductor company reported about $390 million in AMD Instinct MI308 sales to China, according to its earnings release. Excluding the inventory reserve reversal and AMD Instinct MI308 sales to China, fourth quarter non-GAAP gross margin would have been about 55%, it said.
AMD also said it benefited from about $360 million release of previously reserved AMD Instinct™️ MI308 inventory and related charges.
Fourth quarter revenue "likely fell short of elevated expectations," Bloomberg Intelligence analysts wrote in a note Tuesday after the results were released. Still, they said "server and PC CPU demand likely remains strong, and the resumption China sales is a positive sign. Focus is likely to shift to the full-year server GPU revenue outlook, as the majority of growth remains 2H26 weighted."
The mid-point of the revenue range represents a 32% gain from a year ago. Adjusted gross margin is expected to be about 55%, exceeding the 54.5% that analysts were anticipating.
Before the results were released, the options market was implying a 7.9% move in the share price.
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