Shares of Advanced Micro Devices Inc. experienced a decline in Tuesday's extended session after the company fell short of expectations with its latest revenue outlook. The stock had previously enjoyed a significant 80% rally since the company's last earnings report.

For the first quarter, AMD forecasted revenue of $5.4 billion at the midpoint, below the projected $5.7 billion estimated by analysts tracked by FactSet. The company expects flat data-center revenue on a sequential basis, with a seasonal decline in server sales being offset by a strong data-center GPU ramp referring to graphics processing units. AMD also anticipated sequential revenue declines in its client, embedded, and gaming businesses, with a potential "significant double-digit percentage" fall in semi-custom revenue.

This revenue forecast from AMD follows Intel Corp.'s disappointing first-quarter outlook, which revealed a revenue forecast that was at least $1 billion below the FactSet consensus view. Analysts had anticipated possible weaknesses in AMD's guidance as a result of Intel's performance. As a result, AMD's shares experienced a decline of about 2% in choppy after-hours trading on Tuesday.

In the fourth quarter, AMD generated net income of $667 million, or 41 cents per share, compared to $21 million, or 1 cent per share, in the same period the previous year. On an adjusted basis, the company's earnings per share rose to 77 cents, up from 69 cents a year ago, aligning with consensus expectations. AMD's revenue also saw an increase to $6.2 billion from $5.6 billion, slightly surpassing the FactSet consensus estimate of $6.1 billion.

The company experienced growth in its data-center business, with a 38% increase from the previous year to $2.3 billion, in line with consensus expectations. Client revenue also rose to $1.5 billion, a 62% increase compared to the previous year, meeting consensus projections. However, gaming revenue declined by 17% to $1.4 billion, although it exceeded the consensus estimate of $1.2 billion. Embedded revenue also dropped by 24% to $1.1 billion, meeting analyst expectations.

During AMD's earnings call, investors will be paying close attention to comments concerning the MI300 accelerator for artificial intelligence applications. HSBC analyst Frank Lee noted that the recent rally in AMD shares "has raised expectations significantly, especially for AI MI300 GPU revenue potential." Lee also mentioned that he was significantly increasing his full-year expectations for 2024 and 2025, expressing confidence in AMD's data-center GPU revenue opportunity.

While AMD's solid performance in net income and revenue growth in certain business segments were positive, investors expressed concern over the company's revenue outlook, leading to a slight decline in share value. However, analysts remain optimistic about AMD's long-term potential and the increasing demand for data-center and artificial intelligence technologies. The market will closely monitor any updates from the company regarding its forward strategy and growth prospects.