**Advanced Micro Devices (AMD)** anticipates a decline in its gross margin for the first quarter of 2026, expecting it to drop 200 basis points to 55%. This shift is primarily due to the absence of a $360 million inventory reserve benefit that boosted the fourth quarter’s gross margin to 57%. Revenues from the MI308 product line in China were approximately $390 million in the fourth quarter, with forecasts dropping to around $100 million for the upcoming quarter.
For the first quarter of 2026, AMD projects revenues between $9.5 billion and $10.1 billion, reflecting year-over-year growth of about 32%. Additionally, operating expenses are expected to rise to $3.05 billion, a 42% increase from the previous quarter. Despite competitive pressures from companies like NVIDIA, which expects a first-quarter 2027 gross margin of 74.9-75%, AMD’s growth is anticipated to stem from its Data Center, Client, and Gaming segments.
