Every quarter we examine earnings from an illustrative set of processor companies targeting data-center, PC, and embedded markets.
Data Center
AMD
AMD disappointed investors. Although the data-center business extended its growth streak and Instinct GPU sales topped $5 billion in 2024, the company didn’t supply estimated 2025 GPU revenue. Nvidia is selling every data-center GPU it can make, but it’s unclear if the same is true for AMD. Moreover, AMD’s answer to the Nvidia Blackwell B200 arrives at the same time as Blackwell Ultra emerges to replace the B200, leaving AMD a step behind. The subsequent Instinct MI400 is due in 2026 and may catch AMD up.
The Epyc server-processor business did well. AMD notched further share gains after Q3’s stall. Significantly, the gains came despite Intel closing the core-count gap. Moreover, AMD’s revenue share is far greater than its unit share, indicating it’s capturing the market’s top end. Cloud service providers buy expensive, many-core processors, and AMD has funneled profits from these sales into developing the OEM and channel relationships necessary to win over enterprise customers. AMD revealed that Epyc’s on-premises sales grew year over year. Once jumpstarted, enterprise growth should keep Epyc’s momentum going.
Intel
We separately covered Intel’s 4Q24 earnings call. In it, the company struck a humble tone, expressing sentiments such as a need to bring Xeon customers back. Toward that end, it implied that the successful Granite Rapids launch was a necessary but insufficient step. Its successor, Diamond Rapids, must be at least as successful, and customer feedback on that new Xeon has been positive. The company further implied it would cut prices, stating it needed to “stem the tide of share loss in the data center.”
Moreover, Intel stated it was “prioritizing areas where [it] can drive differentiated value,” which sounds like canceling projects. Falcon Shores, having been recast as a GPU instead of a next-generation Gaudi NPU, has been relegated to a test chip. Instead, Intel will pursue a rack-scale system based on Falcon’s successor, Jaguar Shores. We expect Jaguar eventually will be chopped. Regarding Gaudi, Intel again wrote down inventory. We expect Intel to nix Clearwater Forest, having delayed its launch to 1H26. An E-core Xeon is a niche product and an unlikely priority.
Turning to Q4 data-center revenue, Intel grew sequentially. However, revenue fell compared with the same period last year and trailed that of AMD, which benefits from being able to sell its AI processors.
Nvidia
Having suffered months of “will it or won’t it” questions about Blackwell shipments, they took off with only a slight delay. Nvidia says Blackwell sales beat expectations, which hardly seems possible given they were always going to sell every unit they could. The company stated the GPU is ramping up sales faster than any other in its history, topping $11 billion during the quarter.
Nvidia said Blackwell is going into multiple 100,000-GPU clusters, including one employing GB200 and InfiniBand. The latter comment implies some—perhaps most—big data centers aren’t using Nvidia’s unique networking technology but Ethernet instead, which Nvidia also offers. Indeed, the company’s networking revenue surprisingly declined in the quarter. Wheeler’s Network has more analysis of the decline. Despite InfiniBand’s advantages, its scalability is hitting practical limits as data-center size increases, and customers likely prefer to avoid being any more beholden to Nvidia than they already are. Nvidia stated the networking business would resume growth this quarter.
Nvidia’s data-center sales grew 18% sequentially and doubled compared with the prior year, as Figure 1 shows. Linear growth continued for yet another quarter and outpaced that of the company’s rivals, although Nvidia sells modules, boards, systems, and racks, making it only nominally a chip company. Sales to cloud service providers and enterprises both doubled year over year.
Figure 1. AMD, Intel, and Nvidia data-center revenue. (Data source: companies, except for estimates.)
PC
AMD
AMD’s PC-processor business also had a strong quarter; the client business grew 58% over the same quarter last year. Channel sales of desktop processors set a record, likely owing to the popularity of the Ryzen 9800X3D among gamers. The company also reported record mobile-processor sales to OEMs. Notching ever more OEM sockets, AMD is poised for continued share gains. Importantly, AMD has won sockets in Dell business PCs, which we highlighted in our CES 2025 coverage.
Share rose for both desktop and mobile processors compared with the same quarter last year. Sequentially, while mobile share rose, desktop-processor share slightly receded, likely owing to Q3 benefiting from AMD filling customers’ pipelines with the newly launched Ryzen 9000 series.
AMD may have also benefited from customers stocking up on the new Radeon 9000 GPUs. The company planned for CES to mark their initial availability to end users but delayed the launch until March. AMD gained GPU share in the quarter as the much larger Nvidia saw sales decline. Overall, unit shipments of discrete GPUs are slowly declining, a trend that AMD is accelerating with integrated (IGP/APU) chips like Strix Halo featuring huge graphics units.
Intel
Intel’s PC business (CCG) rebounded after a lackluster Q3, which the company attributed to customers digesting inventory that quarter and stocking up in advance of tariffs in Q4. Lunar Lake’s success remains a mixed blessing, selling all right but bringing down margins owing to its on-package memory and outsourced fabrication. Intel’s Arrow Lake has been derided by enthusiasts but is otherwise well received. Its weak NPU could lead Intel to refresh the design before its successor fully ramps up production. Here, too, margins are being pressured. Arrow is a multidie design, raising costs compared with a monolithic chip, and it’s produced externally by TSMC.
Looking forward, Intel guided CCG to decline sequentially in Q1, which is a normal seasonal pattern. Lunar’s replacement, Panther Lake, will ship in the second half, but we expect availability will be low until next year. Arrow’s replacement, Nova Lake, should arrive in 2026. This protracted schedule helps make the case for a refreshed Arrow.
Nvidia
For now, Nvidia’s PC business is selling GPUs. This past quarter, revenue declined compared with the prior quarter and the year-ago period, as Figure 2 shows. The company attributed the decline to capacity constraints, which we interpret to mean Nvidia favored producing data-center chips over their PC counterparts. This quarter, Blackwell-generation PC GPUs have been in short supply. They would’ve shipped to board partners in Q4. Their limited availability, high prices, and numerous problems helped AMD make a splash with its new GPU.
Figure 2. AMD, Intel, and Nvidia PC revenue. (Data source: companies, except for estimates)
Embedded
The embedded-processor market remains in the doldrums. We track a company group that, while small, illustrates market dynamics.
AMD
Mainly coming from FPGAs, AMD’s embedded revenue was stable in Q4 but down from the prior year as segments that fared poorly offset those that did well. AMD reported record design wins, however, including large embedded-processor designs. The company’s long-term outlook, therefore, is positive.
Intel
Intel’s NEX revenue extended the gains it had made in prior quarters and is well above beginning-of-the-year lows. The company described buying patterns as having resumed normalcy. As we noted in our Q3 review, this reporting unit includes a combination of Ethernet components, processors for networking and telecommunications, and processors for “edge” (i.e., other embedded) applications. The company will start folding results from the lattermost segment into client PCs and is rumored to be selling off the networking/telecom piece.
Microchip
Among these companies, Microchip is the most conventional embedded supplier. Its microcontroller (MCU) sales have continued to fall and should decline again next quarter, as Figure 3 shows. That’s what we previously wrote, and it’s true again this quarter. For the final 2024 quarter, Microchip’s MCU sales contracted again, and the company projects a further decline in Q1. In Q4, distributors sold more than Microchip shipped to them, indicating that they burned inventory. However, Microchip stated inventories are approaching normal levels, suggesting the downturn is nearing its end.
During the pandemic-induced semiconductor shortage, Microchip and others required noncancelable, nonreturnable (NCNR) orders. In the past, customers overordered during chip shortages to raise their allocations. As normalcy returned, they canceled orders, inflicting a sharp sales downturn on suppliers. Imposing the NCNR policy, unfortunately, didn’t curtail overordering. Microchip stated during its earnings call that smaller customers may have ordered a 24-month supply. Chipmakers didn’t suffer an immediate downturn but instead a protracted slide. Moreover, customers have no incentive to adopt new designs, further inhibiting suppliers’ ability to increase their value. Ultimately, the industry has yet to find a way around pathological customer behavior and boom and bust cycles.
Figure 3. AMD, Intel, and Microchip embedded revenue. (Data source: companies, except for estimates)
Bottom Line
Indications at the close of Q4 are that 2025 will be a good year for the semiconductor industry. Even if data-center demand diminishes, it’s unlikely to fall so much as to keep Nvidia from selling everything it can make. As the company grows, other chip suppliers become a smaller portion of the market. The PC market should grow, buoyed by replacements of Covid-era systems and perhaps AI capabilities. The processor business’s sick man, the embedded market, should finally hit a trough.