(Bloomberg) — Advanced Micro Devices Inc., Nvidia Corp.’s closest rival in artificial intelligence processors, said that US restrictions on sales to China will cost $1.5 billion in revenue this year, a warning that clouded an otherwise upbeat outlook.
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The guidance stems from a new export restriction imposed in April that targeted AMD’s MI308 chips, the company said during an earnings call on Tuesday. AMD had said last month that it expected to record an expense of about $800 million because of the new rules.
AMD shares slid in late trading following the remarks. They had been up more than 6% after the company gave a strong revenue forecast for the current period, boosted by demand for high-end computers capable of creating and running AI software.
Second-quarter sales are forecast to be about $7.4 billion, the company said in a statement Tuesday. That compares with an average analyst estimate of $7.23 billion.
AMD continues to make gains in the lucrative market for data center processors, taking share from Intel Corp. It’s also benefiting from strong demand for chips that are the main component in personal computers.
“Growth accelerated for the fourth consecutive quarter, driven by strength in our core businesses and expanding data center and AI momentum,” Chief Executive Officer Lisa Su said in the statement. “Despite the dynamic macro and regulatory environment, our first-quarter results and second-quarter outlook highlight the strength of our differentiated product portfolio.”
Shares of the chipmaker closed earlier at $98.62 on Tuesday, leaving it down 18% this year.
AMD’s first-quarter sales rose 36% to $7.4 billion, topping the $7.12 billion estimate. Profit was 96 cents a share, minus certain items.
Revenue in the data center division was $3.7 billion in the period, a gain of 57% from the same period a year earlier. On average, analysts had predicted $3.66 billion. Personal computer-related sales climbed 28% to $2.9 billion.
In the decade since Su took the top job at AMD, the company has transformed itself into a leading provider of technology across the computing industry. It now reports more than five times the revenue it had 10 years ago and is no longer in the shadow of Intel. But it’s still well behind Nvidia in the exploding market for AI gear.