Advanced Micro Devices (AMD) reported its earnings for the first fiscal quarter ending March 29, 2025. The company surpassed analysts’ expectations and projected higher revenue for the current quarter.

However, AMD expects to lose about US$700 million in revenue during the current quarter due to the export restrictions, with total losses projected to reach US$1.5 billion by the end of its fiscal year.

Despite the challenges, the revenue rose 36% year-over-year to US$7.4 billion, with a gross margin of 43%.

AMD CEO Lisa Su said that the company achieved its first-quarter results while navigating export regulations on advanced AI chips.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Export restrictions carry steep revenue costs beyond headline numbers

AMD’s $800 million impairment cost is just the tip of the iceberg according to analyst projections.

J.P. Morgan estimates the restrictions could reduce AMD’s 2025 earnings per share by 8-10% and translate to a revenue risk of $1.5-1.8 billion from its anticipated $8 billion GPU segment 1.

This mirrors a broader pattern affecting the entire AI chip industry, with Nvidia flagging a $5.5 billion inventory charge that implies a $15-16 billion revenue impact, approximately 8-10% of its projected $180 billion datacenter revenue 1.

These restrictions create a complex strategic challenge for chip companies who must now balance complying with U.S. national security policies while maintaining relationships with Chinese customers who represented a significant growth market.

HSBC’s downgrade of AMD’s target price from $90 to $70 demonstrates how these geopolitical tensions are directly impacting investor confidence in the semiconductor sector 2.

2️⃣ AMD gaining momentum in AI chips while diversification provides resilience

AMD’s 57% growth in data center revenue shows the company is successfully challenging Nvidia’s dominance in the AI chip market.

The company’s $5 billion in AI GPU sales during fiscal 2024 represents significant progress in a market that was almost entirely dominated by Nvidia just a few years ago 3.

AMD’s balanced business model, with 68% growth in client revenue for laptop and PC chips, provides a buffer against the AI chip export restrictions that’s not available to more specialized competitors 14.