AMD Posts Record Q4 as Data Center Soars, China Sales Loom
Chipmaker beats with $10.3B revenue and $1.53 EPS, but Q1 guide implies sequential decline. China sold $390M in restricted chips last quarter.
AMD delivered another record quarter. The stock rose modestly anyway—because the forward look contains complications.
The chipmaker reported Q4 revenue of $10.3 billion, beating consensus estimates of $9.67 billion. Adjusted EPS hit $1.53, up 40% year-over-year and well above the $1.32 analysts expected. Full-year 2025 revenue reached $34.6 billion, also a record.
Shares rose 1.8% in after-hours trading to $250.70. The muted reaction reflects what came next in the earnings release: Q1 guidance that implies a sequential decline and a China disclosure that raises regulatory questions.
The Quarter That Was
AMD's core businesses all delivered.
The data center segment—where AMD competes against Nvidia in AI accelerators—grew 34% year-over-year to $4.2 billion. The company's MI300 and MI308 chips continue to win enterprise workloads, though they remain a distant second to Nvidia's dominant H100 and H200 platforms.
Client and gaming surged 37% to $3.9 billion, driven by Ryzen processor demand for laptops and PCs. AMD has been taking market share from Intel for years now, and that trend showed no signs of reversing.
The embedded segment grew just 3% to $950 million—a slower segment that reflects broader industrial and automotive weakness.
The China Question
Buried in the release: AMD sold $390 million worth of MI308 chips to China last quarter.
The MI308 is a restricted chip under U.S. export controls—designed specifically for the Chinese market to comply with regulations that limit AI accelerator performance. Sales to China are legal, but they're subject to scrutiny. And they're declining.
Management guided Q1 China revenue to just $100 million, down 74% sequentially. That's partly due to tighter enforcement, partly due to the Chinese government directing local firms toward domestic alternatives like Biren's new Hong Kong-listed chips.
For investors, the China exposure cuts both ways. It's been a source of revenue that competitors like Nvidia are losing. But it's also a regulatory risk that could become a headline at any time.
Q1 Outlook
AMD expects Q1 2026 revenue of approximately $9.8 billion—about 5% below Q4 and roughly flat with Q1 2025 at constant currency. The midpoint implies 32% year-over-year growth, which sounds strong until you compare it to Q4's 43% growth rate.
Sequential declines are normal in semiconductors. Q1 is seasonally soft after holiday PC sales and enterprise budget cycles reset. But the guidance gave investors who hoped for continued acceleration a reason to pause.
Gross margin guidance of 55% (non-GAAP) was roughly in line with Q4's 57%. Operating expenses are expected to rise as AMD invests in next-generation products and manufacturing partnerships.
The Competitive Picture
AMD occupies an unusual position in the AI chip market. It's clearly the number-two player behind Nvidia, but "number two" in a market this large still means billions in revenue.
The company's MI300X and MI308 accelerators have found homes at cloud providers and enterprises that want alternatives to Nvidia's dominant ecosystem. Microsoft, Meta, and several hyperscalers have publicly committed to AMD silicon.
But AMD lacks Nvidia's software moat. CUDA—Nvidia's programming framework—remains the industry standard. AMD's ROCm alternative is improving, but switching costs remain high. Enterprise customers often default to Nvidia simply because their developers know how to use it.
This dynamic limits AMD's pricing power and market share ceiling. The company can grow by taking the non-Nvidia portion of an expanding market. Whether it can take share from Nvidia directly remains unproven.
What the Results Mean
AMD's Q4 demonstrated that demand for AI compute isn't slowing. Data center buildouts continue at record pace, and AMD is capturing some of that spending.
But the Q1 guidance and China disclosure introduce uncertainties that Q4 strength doesn't fully offset. The stock trades at roughly 30x forward earnings—reasonable for a semiconductor company with this growth rate, but not cheap enough to absorb multiple compression if guidance disappoints.
For chipmakers broadly, AMD's results confirm that AI infrastructure spending remains robust. That's bullish for the semiconductor supply chain, including TSMC, ASML, and equipment makers.
What to Watch
Track Mi300/Mi308 datacenter revenue in coming quarters. That's the metric that shows whether AMD is gaining share or just riding market growth.
Watch China policy developments. Any tightening of export controls would hit AMD's restricted-chip sales immediately.
And monitor gross margins. AMD is investing heavily in manufacturing and R&D. If margins compress while revenue decelerates, the earnings story becomes more complicated.
AMD isn't Nvidia. But in a market where everyone wants AI chips and Nvidia can't supply them all, being a credible alternative has value. The question is how much value—and Q1 will provide the next data point.