Advanced Micro Devices (AMD) has predicted a $1.5 billion revenue loss this year due to new U.S. restrictions on chip exports to China, which will require the company to secure a license for selling advanced artificial intelligence (AI) processors to the region. Despite the projected setback, AMD’s forecast for second-quarter revenue exceeded Wall Street expectations, with analysts attributing the positive outlook to customers accelerating chip purchases ahead of the new tariffs. Following the announcement, AMD’s stock rose by approximately 1% in after-hours trading, after seeing fluctuations of up to 6% in gains and 3.5% in losses during the regular session.
The U.S. has ramped up its efforts to curb AI chip exports to China under both the Biden and Trump administrations, citing national security concerns. The restrictions are designed to limit China’s ability to develop sophisticated AI systems that could pose risks to U.S. security.
Impact of U.S. Export Restrictions on AMD’s Revenue
During a conference call on Tuesday, AMD CEO Lisa Su acknowledged the significant impact that these export controls would have on the company’s business, with most of the revenue loss expected in the second and third quarters of the year. Despite these challenges, Su expressed optimism for the company’s performance, stating that she still anticipates strong double-digit growth in AI chip revenue from AMD’s data center division in 2025.
Su described the export restrictions as a “headwind” but emphasized that the company has other growth areas that will help mitigate the impact. “It’s certainly a challenge, but one that we believe is manageable given the overall strength of our business,” she remarked. Earlier in April, AMD had warned investors that the new export tariffs would lead to an $800 million charge on its financial results.
For the second quarter, AMD forecast an adjusted gross margin of 43%, a decrease of 11 percentage points from its previous margin excluding the impact of the tariff charge. While these financial adjustments reflect the strain from the new export restrictions, the company remains optimistic about its future growth.
Nvidia Faces Similar Challenges
AMD’s rival, Nvidia, is also grappling with similar challenges due to the new U.S. restrictions on chip exports to China. Nvidia has warned that it will need to secure an export license to continue selling its AI processors to the Chinese market, and it faces a massive $5.5 billion charge as a result of the export controls.
China’s Role in AMD’s Revenue and the Impact of Export Controls
China constitutes roughly 25% of AMD’s total revenue, and the new export controls are expected to reduce the company’s revenue by nearly 5%, based on current projections for 2025. According to AMD’s CFO Jean Hu, the $1.5 billion revenue impact stems directly from the export restrictions announced in April. Despite this setback, analysts suggest that many of AMD’s large customers are preemptively buying chips ahead of the tariffs, which could lead to stronger demand in the short term.
Michael Schulman, chief investment officer at Running Point Capital, commented on the situation: “Big hyperscalers, such as major cloud providers, would rather pull forward their chip orders to avoid the uncertainty of the new export-license requirements.” However, Schulman cautioned that after these accelerated orders, AMD may face challenges in the third quarter, when demand could dip significantly as inventory levels are replenished.
AMD’s Continued Growth Amid Challenges
Despite the challenges posed by the export restrictions, AMD’s revenue outlook remains strong, driven by strong demand for its advanced processors. These processors are increasingly in demand by major players in the cloud computing and AI industries, including companies like Microsoft, Meta Platforms, and others. These cloud giants have recently increased their investments in AI infrastructure, which is expected to fuel continued growth for AMD.
On the conference call, Su reported that there was little sign of “tariff-related activity” in the first quarter of the year, suggesting that the impact of the export restrictions has not yet been fully realized. AMD expects to generate about $7.4 billion in revenue during the second quarter, plus or minus $300 million, surpassing analysts’ average estimate of $7.25 billion.
Strong Q1 Results and Future Projections
In the first quarter, AMD posted better-than-expected results, with total revenue jumping by 36% to $7.44 billion. This growth was driven by a 57% increase in sales from its data center division, which reached $3.7 billion, surpassing analysts’ estimates of $3.62 billion. The company’s adjusted profit of 96 cents per share also exceeded Wall Street’s predictions by 2 cents.
While AMD is facing challenges in China, the company’s growth in other regions and sectors has been robust. The success of its data center business, which includes a significant portion of AI-related hardware, has positioned the company well to weather the impact of the new tariffs.
Competitors Struggling in the AI Space
In contrast to AMD’s positive outlook, other tech companies in the AI sector have faced difficulties. Marvell Technology and Super Micro, two other prominent players in the semiconductor and server markets, both disappointed investors on Tuesday. Marvell delayed its planned Investor Day until 2026, citing economic uncertainty, while Super Micro lowered its 2025 revenue forecast, raising concerns about its position in the AI market. As a result, Marvell’s stock dropped by 4.5%, and Super Micro’s shares fell by 5%.
Conclusion: AMD’s Resilience in a Challenging Market
Despite the hurdles posed by the U.S. export restrictions to China, AMD has managed to maintain a positive growth trajectory, largely thanks to the ongoing demand for its AI processors from major cloud providers and data centers. While the $1.5 billion revenue hit is a significant challenge, the company’s diverse business segments and strong product offerings in the AI space provide a solid foundation for continued growth in the coming months. As the situation with export controls continues to evolve, AMD will need to navigate these challenges carefully, but its resilience in the face of adversity will likely allow it to continue to thrive in the rapidly growing AI market.
