By Arsheeya Bajwa and Max A. Cherney

(Reuters) - Advanced Micro Devices ( AMD ) on Tuesday forecast it would suffer a $1.5 billion impact on its revenue this year due to new U.S. curbs on chips, which require it to obtain a license to ship advanced artificial-intelligence processors to China.

Shares of AMD were down about 1% in extended trading after initially rising 6% after the company released quarterly results. 

Due to an $800 million charge from new U.S. curbs on chip exports to China, AMD forecast adjusted gross margin of 43%, which represents an 11 percentage-point drop excluding the charge.

The charge will shave roughly 5% off the Wall Street forecast for revenue of $31.03 billion and most of the impact will be felt in the second half of the year.

Like AMD, Nvidia ( NVDA ) has also warned Wall Street that it will now need an export license to China for a chip tuned to comply with a raft of restrictions imposed by the U.S. Nvidia ( NVDA ) faces a $5.5 billion charge as a result, the company said in a securities filing. Nvidia ( NVDA ) has not yet disclosed what portion of its revenue the charge will impact.

China accounts for more than 24% of AMD's revenue.

Despite the challenges related to U.S.-China trade tensions, AMD issued a second-quarter revenue forecast that topped Wall Street estimates. The optimistic forecast could help reinforce investor confidence in the company's ability to compete against Nvidia ( NVDA ), though analysts said it partially reflected frenzied customer buying to gobble up inventory ahead of potential U.S. tariffs.

On a conference call, AMD CEO Lisa Su said the company had not seen a lot of "tariff-related activity" in the first quarter.

Synovus Trust portfolio manager Dan Morgan said: "There's the potential that people could be buying ahead, anticipating that there could be additional tariffs going forward on PC chips." 

Demand for AMD's advanced processors remains strong as such chips that power complex AI systems for Microsoft, Meta Platforms and other customers, with cloud giants reinforcing hefty spending plans for building AI infrastructure.

The company expects revenue of about $7.4 billion for the second quarter, plus or minus $300 million, compared with analysts' average estimate of $7.25 billion, according to data compiled by LSEG.

The better-than-expected forecast is a result of frenzied customer buying in order to stockpile inventory ahead of U.S. tariffs, according to Summit Insights analyst Kinngai Chan.

In February, the company steered away from a longstanding practice of giving a specific sales forecast for its AI chips, but Su had said AMD expects "tens of billions" of dollars in sales "in the next couple of years."

AMD reported data center sales jumped 57% to $3.7 billion, which topped estimates of $3.62 billion. The company includes much of its AI hardware in its data center segment.

Chip maker Marvell Technology and server maker Super Micro both disappointed investors on Tuesday afternoon. Marvell pushed back a planned Investor Day until calendar 2026, citing the uncertain economy, and Super Micro trimmed its 2025 revenue forecast, adding to concerns about its position in the AI market. Marvell shares dropped 6% after hours and Super Micro fell 4%.

According to Bob O'Donnell, chief analyst of Technalysis Research, AMD continues to gain share in AI data center chips, which include its central processing units, which do not receive as much attention as graphics processing units used for AI.

The company reported first-quarter net profit of 96 cents a share, adjusted for stock compensation  among other things. Analysts had expected adjusted earnings of 94 cents a share.

Revenue jumped 36% to $7.44 billion, beating estimates of $7.13 billion. 

"We delivered an outstanding start to 2025 as year-over-year growth accelerated for the fourth consecutive quarter driven by strength in our core businesses and expanding data center and AI momentum," Su said in a statement.