AMD reported a revenue decline of 18% in its fiscal second-quarter earnings report on Tuesday and issued a forecast that trailed analysts’ estimates. Still, the stock rose more than 4% in extended trading.

Here’s how the company did:

• Earnings: $0.58 per share, adjusted versus $0.57 per share expected by Refinitiv consensus estimates.
• Revenue: $5.36 billion versus $5.31 billion expected by Refinitiv consensus estimates.

For the third quarter, AMD said it expects $5.7 billion in sales, while analysts were looking for revenue of $5.81 billion. It said that it expected its data center and embedded divisions to grow when looking at the entire fiscal year.

“We are expecting a large ramp in the second half for our Data Center business, weighted towards the fourth quarter and we are still looking at a zip code — let’s call it 50%, plus or minus, second half to first half,” AMD CEO Lisa Su said on a call with analysts.

The chipmaker reported net income of $27 million, or 2 cents per share, down from $447 million, or 27 cents per share, in the same quarter last year. AMD excludes certain losses on investments and acquisition-related costs from its earnings.

AMD’s processor business has slowed in recent quarters, reflecting a deep slump in the global PC market. AMD’s total revenue dropped from $6.55 billion a year ago and AMD has reported two straight quarters of declining year-over-year revenue.

But AMD is one of the few companies making high-end graphics processing units (GPUs) needed for artificial intelligence, and analysts are watching to see if its server chips can take market share away from Intel. Intel, AMD’s primary competitor, posted a surprise profit last week and sales that were higher than expected.

Su said on a call with analysts that the company is increasing its AI-related research and development spending, and that the company has developed an AI strategy including AI-specific chips and software development.

AI could also help PC chip sales, AMD said.

“Going forward, we see AI as a significant PC demand driver as Microsoft and other large software providers incorporate generative AI into their offerings,” Su said.

AMD’s client group, which includes sales from PC processors, dropped a massive 54% annually to $998 million because of a “weaker PC market,” it said. AMD noted that market conditions are improving.

“We expect our client segment will grow in the seasonally-stronger second half of the year based on the strength of our product portfolio,” Su said.

AMD’s data center segment reported a decline of 11% to $1.3 billion, which the company said was due to lower server processor sales. AMD said some cloud providers had extra inventory during the quarter.

During the quarter, AMD announced a new chip that’s intended to build and run the kind of AI models that are at the heart of applications like ChatGPT. AMD said that chip, the MI300X, was currently being provided to customers for sampling and that production of the chip would ramp in the fourth quarter.

AMD sells less-powerful chips and networking parts in its embedded segment, which was the only sector of AMD to grow in the period. Revenue in the unit increased 16% year-over-year to $1.5 billion.

AMD’s gaming segment includes graphics processors for PCs as well as chips for consoles like Sony’s PlayStation 5. Sales in the division dropped 4% on an annual basis to $1.6 billion, a decline that could have been worse if not for high demand for “semi-custom” chips like the ones it makes for game consoles.

WATCH: AMD needs to deliver on A.I. in the next few quarters