Letter to the saver

Artificial intelligence: Amd challenges Nvidia but suffers China knot

Tech. The US giant aims to offer integrated solutions to compete with the chip star but uncertainty over the export blockade to Beijing weighs heavily

by Vittorio Carlini

22 September 2025

6' min read

Key points

The China Knot
Major escalation
Quarterly accounts
Strategy

6' min read

Among the companies participating in the Artificial Intelligence (AI) gold rush is one of those performing well. The rise, since the launch of ChatGPT (30/11/2022), is more than 120%. That is to say: greater than that of the Nasdaq over the same period. Who are we talking about? The US semiconductor company Advanced micro devices (AMD). Having said that, the hi tech group's stock on the stock exchange has recently been beating at the top. Over the past month, the performance has been in the red. 'In general,' points out Silvio Bona, an independent technical analyst, 'the longer term, the shares have been making rising highs and rising lows'. Namely, 'There was an important peak at $161.9 (November 2021) and then the historical high at $211.4 (March 2024). Referring, on the other hand, to the lower levels' one starts 'from $55.9 (October 2022) to $78.2 (April 2025)'. In such a context, the stock has 'a bullish bias,' says Bona, 'which, however, has recently slowed down'. There is now 'strong resistance in the $184-200 area. On the downside, on the other hand, the reversal of the upward trend would occur with the breaking of support in the area around 78 dollars'.

TRIMESTRI a confronto

Beyond the value of the individual levels, there is the slowdown. Why? The answer lies, above all, in Washington's escalating trade war against Beijing. In particular, on the front of advanced technologies for Artificial Intelligence (Ai) where the Santa Clara company is active and aims, in addition to continuing its historical competition with Intel, to challenge the chip star Nvidia.

The China Knot

During the publication of the latest quarterly figures, the company's exports to the former Middle Kingdom were an important topic of discussion. During the conference call with analysts, the focus turned to the inventory write-down of USD 800 million. A move related to the stock of a particular product (the MI308 microchip) destined for Beijing, but blocked by new restrictions imposed by the US. Without this charge, management pointed out, non-GAAP gross margin would have been about 11 percentage points higher. Analysts, of course, asked for clarification on the timing of export licensing, but CEO Lisa Su and CFO Jean Hu had to acknowledge that the process was ongoing and that there was no clear visibility at the moment.

FATTURATO E DIVISIONI

A few days after the publication of the quarterly report, a negotiation between the US authorities and the major semiconductor manufacturers, including AMD, began. The result? An agreement - rather surreal and also legally not so solid - according to which the resumption of sales of Ai chips destined for China can only take place by handing over 15% of revenues from Beijing to the US government. The compromise would allow AMD to restart the commercial chain, albeit with reduced margins compared to the past.For now, the export licences for MI308 remain under review. The White House, however, has given the OK in principle, signalling that the administration does not seem to intend to block the Chinese market altogether, but rather to keep it under control. Lisa Su, for her part, confirmed that demand from customers in the former Middle Kingdom has remained and that AMD products are competitive, but she had to admit that there is still no visibility on volumes and timing of recovery.

REDDITIVITÀ E DIVISIONI

The major escalation

In such a context, the unknowns are many. First of all, it remains to be seen whether and how quickly the authorisations for actual shipments will arrive. In addition, the economic impact of the 15% tax on revenues, which risks eroding margins precisely in the Ia segment, now crucial for growth, must be assessed. Finally, chronicled in recent days, Beijing has banned Nvidia's RTX Pro 600D (a chip designed specifically for the Chinese market). It is clear that - although it does not concern AMD - the context of increasing confrontation may further make it difficult for AMD itself to operate in the market in question. In this sense, in the coming quarters it will be decisive to measure whether the recovery of sales in China will really take place and whether it can compensate for the accumulated delays and restore visibility to the Santa Clara group's growth trajectory. Analysts, for their part, seem to be in a wait-and-see position. The so-called 'wait and see'. The agreement with Washington would make it possible - is the indication - to keep the essential Chinese market open. And, however, there would be the issue of profitability. In short: the operators are cautious in the short term but seem more confident - also in the management's abilities - for the medium to long term.

Quarterly accounts

The caution, on closer inspection, is a consequence of the same income statement numbers which - in the wake of the impact of the China factor - did not satisfy the market anyway. Revenues in the last quarter came in at USD 7.69 billion (+31.7% year-on-year). This was higher than consensus estimates. Non-GAAP diluted earnings per share, however, were $0.48. This was below market expectations. The outlook for the third quarter, on the other hand, indicated a turnover of 8.7 billion (+/- 300 million) and the non-GAAP gross margin at around 54%. All this assuming no revenue from the export of the MI308 chip to Beijing. The mix of numbers - in fact - was not liked by investors who, in the session following the release of the quarterly report, caused the stock to drop 6.4%.

So far, some considerations on China and the profit and loss account. What, however, is the company's strategy on the more purely industrial front? To answer this question, it is first useful to recall the group's corporate purpose. AMD divides its activity into three areas: Data Centre, Client & Gaming and Embedded solutions. The latter include, for example, Gpu or Cpu combined with software in order to perform a specific task. They are often embedded in a larger system whose single function they control. On the other hand, there are, on the one hand, technologies for video games and clients; and, on the other hand, solutions used, among other things, in PCs. Finally: data centres. This is where the sales of Cpu, Gpu or SoC designed to work in large data centres are to be found.

CASSA E FLUSSI DI CASSA

The strategy

Well: Amd's strategy, in principle, is to propose more and more integrated solutions. An approach which, on the one hand, allows greater revenues to be achieved on a single commercial offer; and, on the other, increases the relationship with the customer (who is often also co-developer of the technology). That said, the integration, in the PC division, is already partially realised. At the heart of the proposal are the so-called Ryzen chips (now in the 8000 generation) and the Ryzen AI 300 family. These are solutions that combine three fundamental components: the Cpu, which handles general instructions, the Gpu, which carries out and accelerates complex calculations, and finally, the Npu. This is a neural unit dedicated to local Ia processing. That is, operations based on the same Ia do not need the cloud. From next year, there will be a major push on integrated Artificial intelligence (Ai) PCs, especially in laptops.

What about Gaming? Here AMD pursues a dual path. On the one hand there are the Radeon graphics cards, designed for gamers who want maximum performance and which are often combined with Ryzen processors in powerful desktop PCs and laptops. On the other, there is the custom chip business: the group makes the processors that fit inside major consoles, such as PlayStation and Xbox, thus securing stable, long-term contracts.

A visibility of revenues that distinguishes the embedded division itself, where - among other things - chips from the acquisition of Xilinx are offered. Finally: data centres. On this front, the group wants to supply the Epyc CPU and Instinct Gpu together. To these can, if necessary, be added the Dpu itself. In such a context, a single system is created, which constitutes a super computer supported by Ia. In addition, Amd will be able to provide other solutions, e.g. for memory and network connections.

Put differently: the goal is to offer customers a turnkey and scalable data centre. To date, the strategy is in the making. In 2026, the American company wants - via the Elios platform - to actually launch the system on the market.

That said, what are the stock market multiples? According to Seeking Alpha, the current non-GAAP P/e is 46.1. That on 2025 is 40.8. The prospective non-GAAP PEG, on the other hand, is 1.3. Finally, the Price to Cash Flow is 48.8. These values imply, again according to Seeking Alpha, an expensive price. The do-it-yourselfer has an obligation to exercise caution.

Vittorio CarliniRedattore
Luogo: Milano
Lingue parlate: Italiano, Inglese
Argomenti: Finanza, Tecnologia, Analisi fondamentale
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