UPDATE 1-AMD forecasts quarterly revenue above expectations as AI chip demand stays strong
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Adds share movement in paragraph 5
May 5 (Reuters) - Advanced Micro Devices AMD.O forecast second-quarter revenue above Wall Street expectations on Tuesday, betting on resilient demand for its data-center chips as cloud providers accelerate spending on artificial intelligence infrastructure.
The company expects quarterly revenue of $11.2 billion, plus or minus $300 million, compared with estimates of $10.52 billion, according to data compiled by LSEG.
AMD, long seen by analysts and investors as a leading challenger to Nvidia's NVDA.O dominance, is tapping into a new AI hardware opportunity in the form of central processing unit (CPU) as companies move from training models to deploying them, a process known as inference.
Earlier this year, AMD said it had agreed to sell up to $60 billion worth of artificial intelligence chips to Meta Platforms META.O over five years in a deal that allows the Facebook owner to purchase as much as 10% of the chip firm.
Shares of the company rose around 1% in volatile extended trading on Tuesday after surging about 60% so far this year.
The stock has far outperformed Nvidia's 6% gain, and the broader Philadelphia semiconductor index's 48% rise, as of Monday close.
While analysts perceive AMD as best-positioned to benefit from the surging CPU demand due to market share gains and product roadmap, competition from Intel INTC.O, which gave a strong revenue forecast last month, is heating up.
After struggling with its chip production for several quarters, Intel is now ramping up its in-house fabrication efforts to cater to growing CPU demand, posing a threat to AMD, which is beholden to extremely tight capacity at TSMC.
The semiconductor industry is also grappling with a global shortage of memory chips, stemming from a rush to secure supply of high-bandwidth memory used in data centers alongside GPUs and CPUs.
The sharp increase in memory prices is also expected to hit demand for consumer electronics - a key market for AMD - as pricier computers are expected to turn consumers away.