AMD revealed a troubling China sales forecast amid U.S. export restrictions, dragging both AMD and Nvidia stock lower.
Nvidia shares fell 3.4% on Tuesday as uncertainty around Chinese chip sales dragged down the entire AI sector, with the stock declining 2.8% during regular trading and an additional 0.6% in after-hours trading. AMD's stock dropped 6.98% in pre-market trading despite the company beating Q4 earnings expectations with $10.3 billion in revenue, earning $1.53 per share against analyst projections of $1.32 EPS on $9.6 billion revenue. The broader AI sector is struggling as investors sit on the sidelines waiting for clear catalysts, particularly regarding China sales that could provide the necessary momentum.
AMD's earnings call revealed the extent of uncertainty around Chinese sales. CEO Lisa Su stated the company saw some Q4 revenue from China but expects only $100 million from the region in Q1, telling analysts they are "not forecasting any additional revenue from China just because it's a very dynamic situation." The company's data center business remained strong with $5.4 billion in revenue, beating the $4.97 billion estimate, while client business brought in $3.1 billion versus the $2.9 billion forecast. Gaming revenue came in slightly light at $843 million, and memory shortages are creating new problems that could force PC makers to raise prices and potentially kill demand.
Nvidia's $30 billion H200 chip deal with Chinese firms awaits final U.S. government approval, with the Financial Times reporting the deal remains under national security review. According to KeyBanc analyst John Vinh, Chinese companies want approximately 1.5 million chips, and Nvidia agreed to give the U.S. government a 25% cut of those sales. Until the national security review clears, Nvidia cannot move forward with the transaction that Beijing has reportedly authorized firms like Alibaba to prepare for.
AMD showcased new hardware at CES 2026 last month, including the Helios rack-scale server designed to compete directly with Nvidia's offerings, and the MI500 GPU series which promises 1,000x performance gains over older chips. CEO Su believes the AI data center market will reach $1 trillion by 2030. Competition is intensifying from unexpected places, with Google, Amazon, and Microsoft all building custom chips for their data centers. Over the past year, AMD stock climbed 112% while Nvidia rose 54%, with AMD forecasting Q1 revenue between $9.5 billion and $10.1 billion, ahead of the $9.4 billion Street estimate.