<br><br>**AMD's Data Center Results Disappoint A Blow to AI Chip Investors**<br><br>Advanced Micro Devices (AMD) shares plummeted approximately 4% in extended trading after reporting underwhelming data center revenue. The company's inability to capitalize on the growing demand for artificial intelligence (AI) chips has raised concerns among investors who had been betting on AMD's ability to power complex AI systems.<br><br>**Underwhelming Data Center Performance**<br><br>In its second-quarter earnings report, AMD reported a modest 14% growth in data center revenue, reaching $3.2 billion. This performance was roughly in line with analysts' expectations of $3.22 billion. However, the lackluster results have raised questions about AMD's ability to compete with rival NVIDIA, which has seen its data center segment experience significant growth.<br><br>**NVIDIA's Rise**<br><br>NVIDIA's success in the data center market can be attributed largely to its flagship Blackwell chips and systems, which are highly sought after by tech companies. The company's data center business includes graphics processors and networking hardware. In contrast, AMD's data center segment remains relatively small, with revenue of only $3.2 billion.<br><br>**Impact of US Export Restrictions**<br><br>AMD CEO Lisa Su attributed the decline in AI chip revenue to US export restrictions on exports to China. The company began volume production of its next-generation MI350 series AI chips ahead of schedule in June and expects a significant ramp-up in production during the second half of this year.<br><br>**Outlook for Q3**<br><br>For the third quarter, AMD forecasts revenue of approximately $8.7 billion, plus or minus $300 million, compared to analysts' average expectation of $8.30 billion. The company estimates adjusted gross margins of roughly 54%, compared to estimates of 54.1%.<br><br>**Market Reaction**<br><br>The disappointing data center results have sent shockwaves through the market, causing shares to plummet. Investors who had been betting on AMD's ability to capitalize on the AI chip market are now left wondering if the company can recover from this setback. As one analyst noted, AMD trades off of data centers. The failure to deliver on expected growth has raised concerns about the company's future prospects.<br><br>**Conclusion**<br><br>The disappointing data center results have cast a shadow over AMD's otherwise strong performance. The lackluster revenue growth has raised questions about the company's ability to compete with rival NVIDIA and its inability to capitalize on the widespread use of AI. As investors continue to weigh their options, it remains to be seen whether AMD can recover from this setback and regain its footing in the data center market.<br><br>**Keywords** AMD, Data Center, AI Chips, NVIDIA
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