Chipmaker AMD (AMD) announced its third-quarter earnings on Tuesday, surpassing estimates on both the top and bottom lines. Despite the positive results, investors expressed concern as the company fell short of its Q4 revenue guidance. As a result, AMD's shares dropped approximately 4% in after-hours trading.

During Q3, AMD achieved $5.8 billion in revenue and $0.70 in earnings per share (EPS). However, the company's forecast for Q4 anticipated $6.1 billion in revenue, falling short of expectations set at $6.4 billion.

One area where AMD aims to gain ground is in the field of artificial intelligence (AI) chips, where it faces tough competition from industry leader Nvidia (NVDA). AMD CEO Lisa Su has asserted that the AI market is still wide open, presenting opportunities for the company. To bolster its position, AMD recently unveiled the MI300, its latest data center chip.

Wedbush analyst Matt Bryson, who rates the stock as Outperform, cited AMD's potential to thrive in the latter half of 2024 as its AI revenues ramp up. He expressed a positive outlook for the company moving into 2025, despite acknowledging potential uncertainties in near-term results. Similarly, TD Cowen's Matthew Ramsay highlighted the potential for strong growth among AMD, Broadcom (AVGO), and Marvell (MRVL) by the end of 2024 and into 2025, despite the potential for a volatile earnings season.

Investor interest in AMD remains evident as Cathie Wood's Ark Invest recently purchased over 50,000 shares of the company, with the transaction valued at over $5 million. This move further contributed to AMD's year-to-date share price increase of around 50%.

Key figures from AMD's Q3 earnings, compared to analyst expectations compiled by Bloomberg, include actual revenue of $5.8 billion exceeding the expected $5.7 billion, adjusted EPS of $0.70 surpassing the anticipated $0.68, and an actual adjusted operating margin of 22% compared to the expected 21.6%. However, the Q4 revenue outlook of approximately $6.1 billion fell short of the projected $6.4 billion.

As of now, Wall Street analysts hold differing opinions on AMD, with 39 Buys, 12 Holds, and one Sell recommendation.

Despite its strong Q3 performance, AMD's underwhelming Q4 guidance and the ongoing competition with Nvidia have left investors cautious about the company's future prospects.