Advanced Micro Devices Inc. ( AMD ) announced plans to combine its client and gaming segments into a single reportable segment, following a steep 59% year-over-year decline in gaming revenue to $563 million in the fourth quarter of 2024.

What Happened: The semiconductor giant will implement the restructuring beginning with its first quarter 2025 financial statements.

“We plan to combine the client and the gaming segment into one single reportable segment to align with how we manage the business. Therefore, reporting three segments: data center, client with gaming, and the embedded,” Chief Financial Officer Jean Hu said, during the company’s fourth-quarter earnings call.

The gaming segment’s sharp decline was primarily attributed to lower semi-custom chip sales as key customers Microsoft and Sony focused on reducing channel inventory. However, AMD noted a significant milestone with cumulative gaming console shipments surpassing 100 million units in the fourth quarter.

“Looking forward, we believe channel inventories have now normalized and semi-custom sales will return to more historical patterns in 2025,” said Lisa Su, AMD’s Chair and CEO, during the earnings call.

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Why It Matters: The reorganization comes as AMD’s client segment shows strong momentum, posting record revenue of $2.3 billion in the fourth quarter, up 58% year-over-year.

For the first quarter of 2025, AMD expects overall revenue of approximately $7.1 billion, representing 30% year-over-year growth, driven by strength in data center and client businesses offsetting continued weakness in gaming and embedded segments.

AMD has a consensus price target of $175.31 from 31 analysts, with a high of $250 and a low of $110. Recent ratings from Morgan Stanley, Rosenblatt, and Susquehanna give an average target of $187.33, implying a 71.96% upside.

Price Action: AMD closed at $119.50 on Tuesday, up 4.58%. After hours, it fell 8.84% to $108.94, down 31.41% over the past year, according to data from Benzinga Pro.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.