AMD forecasts upbeat revenue on strong AI chip demand, but shares fall on lofty expectations

The Santa Clara, California-based company is regarded as chip giant Nvidia's closest rival in the market for graphics processing units, as major technology companies and governments worldwide ramp up spending on AI infrastructure.

It has stepped up its AI product launches and moved beyond selling individual chips to offering AI systems that combine processors, networking gear and related hardware, giving customers an integrated AI infrastructure option and allowing it to better rival Nvidia's rack-scale offerings.

AMD expects third-quarter revenue of about $13 billion, plus or minus $300 million, while analysts estimate $12.52 billion, according to data compiled by LSEG.

Its expects adjusted gross margin to be about 56%, largely in line with estimates.

The forecast suggests that AMD's multi-billion dollar investments to challenge chip giant Nvidia's dominance in the market for AI chips are beginning to pay off, with sales of its data-center processors accelerating sharply.