AMD is down 9% after reporting earnings. Here’s why

chip maker Advanced Micro Devices (AMD) It fell 9% in early premarket trading Wednesday after its first-quarter forecast fell short of some analyst expectations.

AMD reported fourth-quarter revenue of $10.27 billion, topping LSEG’s consensus estimates of $9.67 billion on Tuesday.

The company said it expects revenue of $9.8 billion in the first quarter, plus or minus $300 million, versus expectations of $9.38 billion. But some analysts had predicted that the chipmaker would provide stronger guidance for the first quarter due to the ongoing increase in spending on processors needed to power artificial intelligence.

Besides, AMD Nvidia The company, one of the main manufacturers of artificial intelligence chips, has seen its stock increase by more than 100% in the past year, driven by increased demand.

“First of all, expectations were pretty high,” Susquehanna’s Chris Rolland said on CNBC’s “Closing Bell Overtime.”

“Secondly, they announced unexpected Chinese revenue in the quarter. It wasn’t in the street numbers, so when you factor that in, the cadence was a lot less important than we thought.”

But he added that demand for AMD chips in data centers remains strong and the company is signaling multi-gigawatt contracts in the future.

The chipmaker signed a deal with OpenAI in October that sees the startup take a 10% stake in AMD. OpenAI will deploy AMD’s 6-gigawatt Instinct graphics processing units over several years, starting with the launch of the first 1-gigawatt chips in the second half of 2026, the companies said.

Seer it also announced in October that it plans to distribute 50,000 AMD AI chips starting later this year.