AMD raises AI chip production forecasts by $1.5 billion, but it is not enough

AMD announced that it is raising its AI chip production forecasts by $1.5 billion, but investors believe that this is not enough, writes Reuters.

Even though the company nearly doubled its forecasts for processor production to $3.5 billion, this was not enough to meet Wall Street’s forecasts, which were disappointed with the state of the chipmaking business and the gaming business.

AMD CEO Lisa Su said that the company could sell more than $3.5 billion worth of AI chips, but analysts had predicted sales in the range of $4 to $8 billion the day before. The company’s shares were tied to analysts’ forecasts.

“AMD posted a disappointing quarter, with the most notable being a marked decline in operating profit and operating margin. The company had little margin for error amid high expectations, and investors were disappointed with the outlook for the current quarter,” said Investing.com analyst Jesse Kohn.

While the company expects revenues of $5.4 billion, analysts had estimated potential revenue of $5.73 billion.

The company’s gaming business declined by 17% to $1.5 billion after peaking at profits from chips made for XBOX and PlayStation consoles. Su expects the gaming business to grow slowly in the second half of the year as more AI PCs hit the market.