ZACKSยท2025-04-16 20:00Core Insights - The U.S. has imposed new licensing requirements for AMD and NVIDIA chips to be exported to China, impacting their growth prospects in a significant market [1][2] - AMD's shares fell approximately 7% in pre-market trading, while NVIDIA's shares declined around 6% following the announcement [1] - China represents a substantial portion of revenues for both companies, with 24% of AMD's 2024 revenues and 13% of NVIDIA's fiscal 2025 revenues coming from the region [2] AMD's Financial Performance - AMD's Data Center revenues accounted for about 50% of total revenues in 2024, increasing by 69% year-over-year to $3.9 billion [9] - The company generated over $5 billion in data center AI revenues in 2024, driven by deployments of MI300X by major clients like Meta Platforms and Microsoft [10] - The Zacks Consensus Estimate for AMD's 2025 earnings is $4.59 per share, reflecting a year-over-year growth of 38.67% [15] Competitive Landscape - AMD faces intense competition from NVIDIA, particularly in the data center and AI chip markets, contributing to a 21.2% drop in AMD's shares year-to-date [3] - The company has been expanding its product portfolio, including the fifth-generation EPYC processors and Instinct accelerators, to counter NVIDIA's market position [5][11] Strategic Initiatives - AMD has established a rich partner base, including major companies like Cisco, IBM, and Microsoft, to enhance its market presence [13] - Recent acquisitions, such as Silo AI and ZT Systems, aim to bolster AMD's AI capabilities and infrastructure [14] Valuation and Market Sentiment - AMD stock is currently considered overvalued, with a forward Price/Sales ratio of 4.6X compared to the industry average of 2.84X [16][17] - The stock is trading below its 50-day and 200-day moving averages, indicating a bearish trend in the market [20]