Advanced Micro Devices (AMD) reported fourth-quarter revenue of USD 10.3 billion, up 34% year over year and 11% sequentially, exceeding guidance. The first-quarter revenue forecast of USD 9.8 billion is ahead of FactSet estimates, indicating 32% growth year over year. AMD reiterated long-term financial targets, expecting a 35% revenue CAGR over the next 3-5 years, with a 60% CAGR in data center revenue aiming for USD 100 billion by 2030.

The revenue boost of USD 390 million from previously-banned MI308 chip sales into China contributed to AMD’s strong performance. The core data center chip business saw growth in AI accelerators (GPUs) and demand for x86 server processors (CPUs). Medium-term concerns about OpenAI’s expansion continue to impact AMD’s stock, but efforts are underway to bring MI450 products to OpenAI this year.

Maintaining a USD 270 fair value estimate for AMD, shares dropped about 7% after hours. Investors may have overestimated the revenue growth potential in server CPUs, similar to Intel’s recent experience. AMD anticipates first-quarter revenue growth in data center but declines in client (PCs), gaming, and embedded markets. Sequential growth is expected in server CPU and GPU revenue, with moderate growth anticipated in the latter.

Read more at Morningstar: AMD Earnings: Data Center Demand Still Looks Quite Strong to Us