Investing.com - Advanced Micro Devices (NASDAQ: AMD) shares slumped by more than 8% in premarket trading on Wednesday, dragged down by an announcement from Elon Musk that SpaceX would no longer purchase processors from the artificial intelligence chipmaker.

Musk lauded AMD’s fierce rival, Nvidia, saying SpaceX has decided to "build exclusively" on Nvidia’s Blackwell artificial intelligence server because it is the "best architecture." Previously, Musk had suggested that SpaceX and Tesla, his electric carmaking company, would use chips from both AMD and Nvidia.

The comments overshadowed what were stellar quarterly sales from AMD. The semiconductor firm posted $11.5 billion in revenue for the quarter ended on June 27, just above Wall Street expectations.

Seen as a primary alternative to Nvidia in the market for cutting-edge AI processors, AMD has been boosted by the high-flying AI trade this year. Data center revenue spiked to an all-time peak of $6.7 billion, meaning the division now represents 58% of total sales, compared to 42% a year earlier. AMD’s EPYC processors and Instinct GPUs are popular products which help power cloud computing and AI workloads.

Meanwhile, AMD’s client and gaming business, which caters to individual consumers, gamers, and corporate clients, brought in revenue of $3.84 billion, up 6.1% from a year ago.

AMD earned $1.66 per share on an adjusted basis on revenue of $11.54 billion in the second quarter. Analysts had been expecting a profit of $1.60 per share and revenue of $11.25 billion.

For the current quarter, AMD expects revenue of about $13 billion, plus or minus $300 million. Analysts had anticipated revenue of $12.51 billion. The revenue guidance implies year-on-year growth of around 41% and sequential improvement of 13%.

"We enter the second half with strong momentum as EPYC demand accelerates, Instinct deployments scale and Helios begins to ramp. More broadly, AI is driving a significant expansion in demand for compute across all of our markets," CEO Lisa Su said in a statement.

Under Su’s leadership, California-based AMD has moved to sign several massive infrastructure deals and partnerships with major hyperscalers. At an investor event in July, AMD highlighted major customer commitments of up to 2 gigawatts with Anthropic, 6 gigawatts with Meta Platforms, and 2.5 gigawatts with Core Scientific. It also raised its view of growth in the central processing unit (CPU) market to more than $200 billion by 2030 -- and aimed to take more than 50% share of that market. CPU server chip demand has soared this year, expanding the AI boom beyond graphic processing units (GPUs).

AMD also guided for server revenue growth of greater than 70% next year, although analysts at Morgan Stanley argued that they had "expected a more substantial near-term acceleration due to the enthusiasm going back multiple quarters."