Advanced Micro Devices (AMD) is back in the headlines with new export restrictions by the U.S. Commerce Department targeting its profitable data center business in China. The firm says it will incur up to $800 million in charges related to inventory write-downs and purchase obligations due to suspended shipments of its MI308 AI chips. As China accounted for more than 24% of AMD’s revenue in 2024, this creates valid concerns over near-term financial headwinds.

The announcement comes amidst a time of rising U.S.-China tech tensions, which have pummeled semiconductor shares overall. Nvidia (NVDA) has also warned that it will take a $5.5 billion hit under similar restrictions, suggesting the sweeping extent of the clampdown. Investors will now be focused on AMD’s capacity to redirect inventory, defend margins, and diversify to alternative high-growth markets as it steers through turbulent geopolitics.

About AMD Stock

Advanced Micro Devices (AMD) is a leading worldwide semiconductor company with its headquarters in Santa Clara, California, and a presence in computing, graphics, and data center markets. It has a market cap of around $140 billion and ranks as a top rival to Nvidia and Intel (INTC) in the area of high-performance computing and AI accelerators.

Throughout the previous 52 weeks, AMD shares have fluctuated between $76 and $187, mirroring a year of AI-fueled hype and policy uncertainty, dropping 40% in the last year while the S&P 500 Index ($SPX) is up 6.2%. 

The shares trade at a forward price-earnings ratio of approximately 22.4x and a price-sales ratio of approximately 5.4x. Any interruption to its AI plans or China revenue stream could prompt a re-rating. Some level of premium is warranted by stretched expectations of growth, but a $800 million charge could test this premise.

AMD Beats on Earnings

The U.S. government’s blocking shipments for export of high-end GPUs, such as AMD’s MI308 chips, to China has taken a toll on the company’s finances. AMD reported that it will take a charge of as much as $800 million, mainly related to inventory and purchase obligations, and highlighted the dependence of its data center segment on Chinese demand.

Management hasn’t yet revised its full-year guidance, but this geopolitical shock will have the effect of necessitating more caution in future earnings. The next earnings release is scheduled for May 6, where investors will seek insight into demand durability both in North America and Europe, and any plans to reallocate impacted inventory internally.

In the last quarter, AMD surprised Wall Street in Q4 2024 with revenue of $7.7 billion and an adjusted EPS of $1.09, just above the $1.08 consensus. But the euphoria proved fleeting, with the firm providing weaker-than-expected guidance, especially in its Data Center division. Even with a lot of hype over its MI300X AI accelerators, take-up has been slow, casting doubts over AMD’s chances of chipping away at Nvidia’s 89% market share of AI server GPU demand. In Q1 2025, AMD forecast revenue of $7.1 billion. Although this came in above analyst estimates, AMD also warned that data center revenue is expected to decline in the first half of 2025. In response, a range of analysts have reduced their full-year EPS estimates.

What Do Analysts Expect for AMD Stock?

AMD has a “Moderate Buy” consensus rating and the average price forecast is at $144.14, implying 58% potential upside. The highest forecast reaches a level of $225, showing a lot of conviction by some experts that AMD can turn around and flourish in the face of adversity. 

This spread of targets shows optimism with respect to AMD’s future in AI infrastructure and some nervousness over international regulatory resistance. The optimism in analyst sentiment seems to be driven by the diversified growth drivers of AMD. From its MI300 next-generation accelerator family to custom silicon deals and more general cloud partnerships, the firm has a myriad of levers in its arsenal.

The next earnings report will be key to see if AMD is able to redirect inventory and maintain its growth narrative beyond China.