Core Viewpoint - AMD's quarterly performance fell short of market expectations, particularly in data center chip revenue, leading to a significant drop in stock price after the earnings announcement [1][3]. Financial Performance - For the quarter ending in June, AMD reported revenue of $7.69 billion and a net profit of $872 million [1]. - Data center revenue grew by 14% year-over-year to $3.2 billion, but this was below analyst expectations [1]. - AMD anticipates future quarterly sales to reach $8.7 billion [1]. Impact of Export Restrictions - AMD attributed its weak performance partly to the impact of export restrictions, reporting an adjusted gross margin of 43%, which would have been 54% without these costs [3]. - The company faced a loss of $800 million in the June quarter due to the ban on exporting its AI chip MI308 to China [3]. - AMD expects these restrictions to result in a total revenue loss of $1.5 billion for the year, primarily affecting the second and third quarters [3]. AI Chip Developments - AMD has begun mass production of the next-generation AI chip, Instinct MI350, which is expected to significantly increase output in the second half of the year [3][4]. - The company also announced the upcoming release of the Instinct MI400 AI chip, set to launch next year, with commitments from OpenAI to utilize it [5]. Market Position and Competition - AMD's MI350 competes with NVIDIA's GB200 chip, with seven out of the top ten model builders and AI companies using AMD's Instinct series products [4]. - Despite AMD being the second-largest AI chip manufacturer after NVIDIA, it has not benefited as much from the surge in AI spending compared to its competitor [1][6]. - Major tech companies have reported optimistic capital spending data, with significant increases in forecasts for capital expenditures, indicating a robust demand for AI infrastructure [6].