AMD Forecasts Over 20% Second-Half Gaming Revenue Drop After 11% Growth
AMD•AMD’s Gaming division grew 11% to $720 million last quarter, but CFO forecasts second-half gaming revenue will drop over 20% as the console cycle enters its seventh year. Shares trade at a 22.3 price-to-sales multiple, double the 10-year high of 12.8, reflecting reliance on AI growth to offset gaming headwinds.
1. Gaming Division Forecast Decline
AMD’s Gaming division posted $720 million in revenue last quarter, up 11% year-over-year. CFO warns second-half gaming revenue will decline by more than 20% versus the first half as the console cycle matures.
2. Valuation Stretched by AI Expectations
Shares trade at a 22.3 price-to-sales multiple, far exceeding the 10-year high of 12.8 after a 322% gain over the past 12 months. This valuation assumes flawless execution across all segments.
3. Console Cycle Impact on Semi-Custom Chips
While the Data Center division drives significant AI-related growth, the gaming headwind represents a meaningful $144 million quarterly revenue shortfall if the 20% drop materializes. Investors must assess whether data center momentum can compensate for this legacy segment slump.
