Advanced Micro Devices (NASADAQ: AMD) will post earnings after the close on Tuesday, with investors watching numbers closely.  Not only will its numbers be important to watch, its results could also have a big impact not only on AMD’s stock but also the entire chip industry.

Over the past year, AI has helped drive huge demand for powerful computer chips. Companies around the world are spending billions of dollars on AI technology, and AMD is one of the companies hoping to benefit. Now investors want to see if that strong demand is continuing.

At the moment, Wall Street expects AMD to report second-quarter earnings per share of $1.62 on revenue of $11.3 billion. That would mark a substantial improvement from the same period a year earlier, when the company posted EPS of $0.48 on revenue of $7.6 billion.

The biggest driver is expected to be AMD’s data center business, where revenue is projected to more than double to $6.5 billion from $3.2 billion in the year-ago quarter. The company’s client segment is forecast to generate $3 billion in revenue, up 20% year over year, while its gaming division is expected to bring in $781 million, a 30% decline from the prior year.

In addition, AMD’s earnings report will be important because it will give investors a better idea of what is happening across the AI industry. Strong results could show that companies are still spending heavily on AI technology. Weaker results could raise questions about whether that spending is starting to slow. Investors will also look for updates on demand from cloud companies, data centers, and other major customers.

Sincerely,

Ian Cooper