AMD's Q2 financial report suffered a setback: the growth in data centers lagged far behind NVIDIA Corporation (NVDA.US), with uncertainties in the Chinese market dragging down performance.

The second quarter profit announced by AMD (AMD.US), the world's second largest artificial intelligence (AI) processor manufacturer, fell short of market expectations on Tuesday, while warning that the process of re-entering the key Chinese market is still full of variables, casting a shadow on the originally optimistic AI business prospects. Although AMD's stock price has risen by over 40% year-to-date, far exceeding the nearly 12% increase in the chip benchmark index - mainly due to market optimism about its AI layout - the latest performance shows that it has not fully capitalized on the AI boom. Currently, technology companies are racing to purchase chips for complex AI systems to support clients such as Microsoft Corporation (MSFT.US), Meta Platforms (META.US), and the leading generative AI company OpenAI. The financial report showed that AMD's second quarter revenue grew by 32% year-on-year to USD 7.7 billion, higher than analysts' expectations of USD 7.43 billion, but adjusted earnings per share were $0.48, lower than Wall Street's expectation of $0.49. Among them, data center revenue increased by 14% to $3.2 billion, slightly below the market's expectation of $3.25 billion. In comparison, competitor NVIDIA Corporation's first quarter financial report showed that its data center business surged by 73% to $39.11 billion, benefiting from enterprises rushing to purchase its flagship product, the Blackwell chip system. AMD CEO Lisa Su explained during the analyst conference call, "Due to export restrictions which resulted in zero sales of MI308 to China, coupled with being in a product iteration period, AI business revenue declined year-on-year." It is understood that three months ago, AMD made an $800 million impairment provision due to export restrictions, and warned that the related sanctions would lead to a $1.5 billion loss in revenue this year. Wall Street is closely watching the performance expectations after the policy shift. "The second quarter data center revenue performance was flat enough to cause market concerns," said Dan Morgan, portfolio manager at Synovus Trust, who holds shares in both AMD and NVIDIA Corporation. "AMD's valuation largely depends on the data center business." Looking ahead, AMD expects third quarter revenue to be around $8.7 billion, higher than analysts' average expectation of $8.37 billion, with an adjusted gross profit margin of about 54%, essentially in line with the market's expected 54.1%. However, the company emphasized that this forecast does not include revenue from its AI chip, MI308, for exports to China, as the relevant license application is still pending U.S. government approval. Last month, the Trump administration revoked the chip export ban imposed in April, leading the market to expect AMD and its competitor NVIDIA Corporation to resume sales. "We appreciate the efforts of the Trump administration to ensure the core position of U.S. technology in the global AI infrastructure," Lisa Su said during the analyst conference call. "As export licenses are gradually approved, we will resume shipping MI308 based on end customer demand and supply chain preparedness. However, as the relevant permits are still under review, third quarter performance guidance does not include any MI308 revenue." Affected by the uncertainty of its Chinese business, AMD's stock price fell over 5% in after-hours trading. However, Lisa Su remains optimistic about the overall AI computing market. "Looking ahead, we clearly see a path for AI revenue to exceed billions of dollars annually," she said, revealing that the company is accelerating the launch of the new generation MI350 product line and expects a substantial increase in chip production in the second half of the year. Under Lisa Su's leadership for the past decade, AMD has developed into a key supplier in the field of computing technology. When old rival Intel Corporation (INTC.US) faced development challenges, AMD reversed its fate with competitive products. As the world's second largest AI graphics processing unit (GPU) manufacturer after NVIDIA Corporation, AMD is favored by major AI customers such as Meta and OpenAI, who are seeking alternatives to NVIDIA Corporation's high-priced chips, especially in the AI model inference and deployment stages. AMD released the new Instinct MI400 series AI chip this quarter, with OpenAI CEO Altman committing to adopting it. Lisa Su emphasized to analysts that the new Instinct MI350 chip matches NVIDIA Corporation's GB200 in training and inference performance. "Seven out of the top ten AI model developers use our Instinct chip," she revealed that AMD is in talks with major customers for cluster construction based on its self-developed chips. In addition to GPUs, AMD's main business also competes with Intel Corporation in central processing units (CPUs). Lisa Su pointed out, "Cloud service capital expenditure growth comes not only from GPUs, but CPUs also make a significant contribution." Data shows that client and gaming business revenue surged by 69% year-on-year to $3.6 billion. Client revenue increased by 57% to $2.5 billion (expected $2.56 billion), mainly driven by strong demand for the Ryzen Zen 5 series desktop processors; gaming revenue increased by 73% to $1.1 billion (expected $0.784 billion), benefiting from the rise in demand for custom gaming console chips and gaming GPUs.