AMD stock slumps 5% on earnings miss, China AI chip concerns

Steve Marcus | Reute of Advanced Micro Devices slumped more than 5% after the chipmaker's earnings fell short of earnings expectations and raised concerns the timing of a restart in China shipments.The Santa Clara, California-based company reported adjusted earnings of 48 cents per , falling short of the 49 cents per expected by analysts polled by LSEG.CEO Lisa Su singled out the hit from U.S. controls on artificial intelligence chips in a call with analysts."AI revenue declined year over year as U.S. export restrictions effectively eliminated MI308 sales to China, and we began transitioning to our next generation," Su said.For the current quarter, AMD forecasted $8.7 billion in revenue, plus or minus $300 million, versus $8.3 billion expected by analysts

The company said its guidance does not account for revenue from its MI308 AI chip designed for the China market to work around chip restrictions.During an interview with CNBC's "Squawk on the Street" on Wednesday, Su said the company has been working closely with the Trump administration on license requirements necessary to ship its chips to China, but took a "prudent" apach to its guide."From our standpoint, we think we have an extremely strong portfolio," she said. "Tens of billions of dollars is the opportunity in a market that's going to be, let's call it 500 billion plus over the next few years."Read more CNBC newsNvidia's set to regain some China access

But it still faces eroding AI chip market Ethereum turns 10: From scrappy experiment to Wall Street's invisible backboneGoogle has dropped more than 50 DEI-related organizations from one of its funding listsAmazon stock sinks after earnings: Here are the key takeawaysEarlier this year, AMD said it would take a $800 million hit during the second quarter as a result of chip restrictions

AMD said in July it plans to soon resume those shipments as the Department of Commerce gets set to restart application review.Some Wall Street analysts raised concerns over how soon those shipments may begin

Analysts at Morgan Stanley called the timing of the restart in China shipments "vague," adding that the company requires a "near terms upside in GPU" to keep its premium."China upside sounds it will take time to materialize (and it sounded we shouldn't count too much on it even if licenses are granted), pull-forward and inventory risks remain, and opex continues to march higher which is limiting earnings leverage," wrote Bernstein analysts.Investors also raised concerns the company's datacenter , which grew 14% to $3.2 billion and includes its central cessors and graphics cessing units."We are more guarded on the company's ability to drive significant scale in Datacenter GPUs over time, and think operating leverage is ly to be hampered by the significant OpEx we believe is needed for the company to support its software and systems efforts tied to datacenters," wrote analysts at Goldman Sachs.Su said Wednesday the company is seeing strong forecasts for compute from some of its largest customers and anticipates an "inflection point" into the third quarter."The data center is actually the main driver of our growth, and we look at that as the opportunity in front of us," she added.Despite the post-earnings move, AMD's revenues grew 32% from a year ago to $7.69 billion and topped a $7.42 billion estimate from analysts polled by LSEG