AMD projects strong second-quarter 2025 revenue, driven by rising demand for its AI and data center technologies despite ongoing global economic challenges. The company anticipates a $1.5 billion revenue shortfall in 2025 due to stricter U.S. export controls on advanced AI chips to China.
The combination of growth and regulatory risk positions AMD at the forefront of the quickening AI revolution. But they have also emphasized the growing influence of geopolitical tensions on the semiconductor sector. As demand grows, AMD must strike a balance between innovation and developing global trade dynamics.
U.S.-China Tech Tensions Bite into Chip Revenues
AMD expects a $1.5 billion revenue shortfall in 2025 due to stricter U.S. export restrictions on AI processors sold to China. The new laws, introduced in April, require companies to obtain licenses before exporting advanced processors like AMD’s latest AI products to China. These export limits reflect broader efforts by the Biden and Trump administrations to curb China’s access to sensitive technologies with national security implications.
In Q1, AMD’s data center segment earned $3.7 billion, marking a 57% annual increase fueled by strong EPYC processor and Instinct GPU demand. The export curbs triggered an $800 million charge in Q1, and AMD expects another $700 million impact from similar issues in Q2. Costs related to unsold inventory and contractual obligations lowered AMD’s projected adjusted gross margin to 43%, 11 points below tariff-free estimates.
CEO Lisa Su said the export restrictions will impact AMD most during the second and third quarters of 2025, especially in China. Despite that, she remains optimistic, predicting strong double-digit growth in AI-driven data center revenue for the remainder of the year.
Jean Hu, the Chief Financial Officer of AMD, confirmed that the combined anticipated effect of the export restrictions is $1.5 billion in 2025. China, which represents approximately 25% of AMD’s total revenue, is critical to this disruption. Based on current estimates, the export restrictions will shave about 5% from the company’s full-year revenue guidance to $31.03 billion.
AI and Data Center Sales Drive Optimism
Despite anticipated revenue constraints from increased export rules, AMD posted a good first-quarter performance, increasing revenue by 36% year on year to $7.44 billion. Customers accelerated their purchases ahead of new U.S. licensing rules, leading AMD to surpass Wall Street expectations.
AMD’s resilience shows in the rapid expansion of its data center business, which saw revenue climb 57% year-over-year to $3.7 billion. Strong sales of EPYC server CPUs and AI accelerators to major cloud providers like Microsoft and Meta primarily fueled the segment’s impressive growth.
Surging demand for MI300-series AI chips has exceeded expectations, solidifying AMD’s competitive stance against Nvidia in the high-performance AI processor market. With continued AI infrastructure investments by enterprises and governments, AMD expects this growth to persist through the second half of 2025.
Conclusion
AMD, along with its competitors Nvidia and Intel, is grappling with increasing export restrictions. Nvidia anticipates a significant $5.5 billion impact due to new licensing regulations on shipments to China. Intel is facing similar hurdles with its Gaudi AI processors, underscoring the broader challenges within the tech industry amidst stricter export controls.
Despite these setbacks, CEO Lisa Su maintains a positive outlook, highlighting the strong demand fueled by advancements in AI, such as OpenAI’s GPT-4.5 and DeepSeek’s R1. As global interest in advanced computing grows, AMD is heavily investing in AI and data center expansion while navigating the evolving international trade landscape. Despite short-term challenges, AMD maintains a positive long-term outlook for its business.
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