Artificial intelligence: AMD takes on Nvidia but faces challenges in China

Among the companies taking part in the artificial intelligence (AI) gold rush, it is one that has stood out for its strong performance. Since the launch of ChatGPT (30 November 2022), its share price has risen by over 120 per cent. In other words: higher than that of the Nasdaq over the same period. Who are we talking about? The US semiconductor company Advanced Micro Devices (AMD). That said, however, the tech group’s share price has recently hit a rough patch. Over the last month, its performance has been in the red. ‘Generally speaking,’ points out Silvio Bona, an independent technical analyst, ‘over the longer term, the shares have been forming higher highs and higher lows.’ What does that mean? “There was a significant peak at $161.9 (November 2021) and, subsequently, the all-time high of $211.4 (March 2024). As for the lows, however, they started at $55.9 (October 2022) and rose to $78.2 (April 2025).’ In this context, the share has ‘a bullish outlook,’ says Bona, ‘which, however, has slowed down recently’. There is now ‘strong resistance in the $184–200 range. On the downside, however, a reversal of the upward trend would occur if support in the region of $78 were breached.”

Beyond the value of the individual levels, there is indeed a slowdown. Why? The answer lies, above all, in the escalation of the trade war instigated by Washington against Beijing. In particular, this is evident in the field of advanced artificial intelligence (AI) technologies, where the Santa Clara-based company is active and aims not only to continue its long-standing rivalry with Intel but also to challenge the chip giant Nvidia.

In this regard, when the latest quarterly figures were published, the company’s exports to the former Middle Kingdom were a key topic of discussion. During the conference call with analysts, attention focused on the $800 million write-down of stock. This move relates to stocks of a specific product (the MI308 microchip) intended for Beijing but blocked by new restrictions imposed by the United States. Without this charge, management pointed out, the non-GAAP gross margin would have been approximately 11 percentage points higher. Analysts, of course, sought clarification on the timeframe for the granting of export licences, but CEO Lisa Su and CFO Jean Hu had to acknowledge that the process was ongoing and that there is currently no clear timeline.

A few days after the quarterly results were published, as is well known, negotiations began between the US authorities and the leading semiconductor manufacturers, including AMD. The result? An agreement – rather surreal and not particularly legally sound – under which the resumption of sales of AI chips destined for China can only take place by handing over 15 per cent of the revenue generated in Beijing to the US government. This compromise would allow AMD to get its supply chain back on track, albeit with lower margins than in the past. For the time being, the MI308 export licences remain under review. The White House, however, has given the go-ahead in principle, signalling that the administration does not appear to intend to block the Chinese market entirely, but rather to keep it under control. Lisa Su, for her part, confirmed that demand from customers in the former Middle Kingdom remains strong and that AMD’s products are competitive, but she had to admit that there is still no clarity on volumes or the timing of the recovery.

In such a context, there are many unknowns. Firstly, it remains to be seen whether authorisations for actual shipments will be granted, and if so, how quickly. Furthermore, the economic impact of the 15 per cent tax on revenue must be assessed, as it risks eroding profit margins in the AI segment in particular, which is currently crucial for growth. Finally, as reported in recent days, Beijing has banned Nvidia’s RTX Pro 600D (a chip designed specifically for the Chinese market). Clearly, whilst this does not directly affect AMD, the context of increasing confrontation may further complicate AMD’s operations in this market. In this regard, it will be crucial over the coming quarters to assess whether sales in China will actually recover and whether this recovery can make up for the accumulated delays and restore visibility to the Santa Clara-based group’s growth trajectory. Analysts, for their part, seem to be adopting a wait-and-see approach. The so-called ‘wait and see’ approach. The agreement with Washington would – so the indication goes – allow the vital Chinese market to remain open. And yet, there remains the very issue of profitability. In summary: market participants are cautious in the short term but appear more confident – including in the management’s capabilities – for the medium to long term.