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AMD Bets on a Big Second Half!

Advanced Micro Devices is betting cloud giants crack open their wallets again later this year. Some of the chipmaker’s fans on Wall Street aren’t so sure that will happen.

AMD tweet on chips

Facstset chart on AMD revenue

AMD posted first-quarter results late Tuesday that included a surprising shortfall in data center processor sales. Revenue for that segment came in flat from a year ago at about $1.3 billion—14% below Wall Street’s target. The company also said it expects data center sales to decline in the current quarter, when analysts had been looking for a slight gain. AMD’s stock slid Wednesday.

But the company also said it expects data center sales to still show growth for the full year, as cloud operators start snapping up new AMD products.

The math on that target is challenging. While it didn’t give a specific number, even a single-digit decline in data center sales during the second quarter would require that segment to show more than 30% growth in the second half of the year compared with the first —nearly double the growth rate seen in the same period last year.

Vivek Arya of BofA cited AMD’s “riskier” second-half growth target as a factor in his downgrade of the stock to a neutral rating on Wednesday.