Advanced Micro Devices reported stronger-than-expected fourth-quarter earnings, but its first-quarter revenue forecast fell short of some analysts’ expectations, sending the stock down more than 7% in after-hours trading. Despite beating consensus estimates for the quarter ended in December, AMD’s guidance for the upcoming period sparked concern amid the ongoing AI spending surge. For the first quarter, AMD projected revenue of $9.8 billion, plus or minus $300 million, slightly above the $9.38 billion analysts had anticipated. However, some investors were looking for a more bullish outlook given the rapid expansion of AI infrastructure demand. The company’s net income surged to $1.51 billion, or 92 cents per share, compared to $482 million, or 29 cents per share, in the same period last year. Overall revenue rose 34% year over year. AMD remains one of the two major suppliers of high-performance graphics processors for artificial intelligence, though it still holds a smaller share of the market compared to Nvidia. Despite this, the company’s shares have more than doubled over the past year, driven by growing demand for its AI chips and strategic wins with major clients like OpenAI and Oracle. The company is preparing to launch its new integrated server-scale AI system, Helios, later this year. CEO Lisa Su said on the earnings call that AMD is in “active discussions” with potential customers for Helios, which will be reported under the data center segment. That segment generated $5.4 billion in revenue during the quarter, a 39% increase year over year, fueled by strong demand for both AMD’s central processing units (CPUs) and AI GPUs. Su emphasized that the AI boom is not only boosting GPU sales but also driving robust demand for AMD’s server CPUs. “Server CPU demand remains very strong,” she said. “Hyperscalers are expanding their infrastructure to meet growing demand for cloud services in AI, while enterprises are modernizing their data centers to ensure they have the right compute required to enable new AI workflows.” The client and gaming segment also performed well, rising 37% year over year to $3.9 billion, driven by increased demand for Ryzen processors in laptops and PCs. AMD has gained market share against Intel in this space. The embedded segment grew more modestly, up 3% to $950 million. AMD also addressed concerns about U.S. export controls limiting its ability to sell AI chips to China. The company reported $390 million in sales of its Instinct MI308 chips in China during the fourth quarter and expects $100 million in China revenue for the current quarter. On the earnings call, Su predicted that over 5 billion people will be actively using AI within the next five years, underscoring the long-term growth potential for the company’s AI and computing platforms.