Yahoo Finance·2026-02-03 21:19Core Viewpoint - Advanced Micro Devices (AMD) forecasts a slight decline in quarterly revenue, raising concerns about its ability to compete with Nvidia in the AI market, resulting in an 8% drop in shares during after-hours trading [1] Revenue Forecast - AMD expects revenue of approximately $9.8 billion for the current quarter, with a margin of error of $300 million, down from $10.27 billion in the previous quarter, which represented a 34% year-on-year increase and exceeded LSEG estimates of $9.67 billion [3] AI Market Competition - Despite being a contender against Nvidia, AMD's expected adjusted gross margin of 55% contrasts sharply with Nvidia's anticipated mid-70% range for fiscal 2027, highlighting the competitive pressure in the AI hardware market [4] Sales to China - AMD's revenue forecast includes $100 million from sales to China, where the situation remains "dynamic." The company received licenses to sell modified versions of its MI300 series of AI chips, which compete with Nvidia's H20 chip [5] Strategic Partnerships - AMD has accelerated product launches and is moving towards selling full AI systems to compete with Nvidia's integrated solutions. The company has a multi-year deal to supply AI chips to OpenAI, potentially generating tens of billions in annual revenue [6] Future Sales Expectations - AMD anticipates rapid sales growth of a new flagship AI server to OpenAI and other clients in the second half of the year, with the CEO expressing confidence that supply constraints will not hinder their plans [7]