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Advanced Micro Devices Inc. (AMD) saw its shares slide in late trading after the company’s revenue forecast missed analysts’ expectations, signaling slower-than-anticipated growth in its artificial intelligence (AI) sales.

AMD announced that its revenue for the fourth quarter is expected to be around $7.5 billion, slightly below the $7.55 billion average estimate by analysts.

The company now projects over $5 billion in sales from AI accelerators this year, up from a previous forecast of $4.5 billion.

However, some analysts and investors had hoped for a more significant increase. AMD is still trailing Nvidia Corp. in the lucrative market for AI chips, which are essential for developing and running AI services.

While AMD's revenue from AI accelerators has risen rapidly compared to a year ago, it remains well behind Nvidia's tens of billions of dollars in earnings from such products.

During a conference call following the earnings report, AMD CEO Lisa Su addressed concerns about the company's growth.

Su emphasized that AMD is ramping up production and gaining the trust of large data center companies that rely on AI accelerators.

“What I will say is customers are very, very open to AMD,” Su stated. “And we see that everywhere we go. Everyone is giving us a very fair shot at earning their business, and that’s what we intend to do.”

Following the earnings report, AMD shares fell more than 7 percent in late trading on Tuesday, though they had risen 13 percent this year, closing at $166.25 in New York.

In the third quarter, AMD’s revenue rose 18 percent to $6.82 billion, exceeding the average analyst estimate of $6.71 billion. Profit, excluding certain items, increased to 92 cents per share, matching projections.

AMD’s new MI300 accelerator products, which compete with Nvidia chips, have emerged as one of the company’s key sales drivers.

However, growth has been constrained by supply availability. Like many companies in the industry, AMD outsources its production to Taiwan Semiconductor Manufacturing Co., as it no longer owns its own plants.

Despite progress in securing more supply from vendors, AMD still expects limited flexibility in meeting demand if it exceeds current projections.

“I think we expect that the environment will continue to be tight, but we’ve also planned for significant growth going into 2025,” Su said. “We feel good about our overall supply-chain capability.”

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