Advanced Micro Devices (AMD  ) has reportedly decided to lay off approximately 1,000 employees, representing 4% of its global workforce.

What Happened: AMD is realigning its resources to compete with Nvidia Corporation (NVDA  ) in the data center chip market, reported Reuters.

"As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps," an AMD spokesperson told the publication.

The company has been aggressively investing in the development of AI chips, which command high prices and are in demand among hyperscalers like Microsoft Corporation (MSFT  ).

The company's data center segment, which includes its AI graphics processors, witnessed a more than two-fold increase in revenue in the September quarter.

Analysts forecast that the data center unit will grow 98% in 2024, outpacing the expected total revenue growth of 13%.

AMD plans to start mass production of its MI325X AI chip in fourth-quarter of 2024, although ramping up production is costly due to limited manufacturing capacity

Why It Matters: Last month, AMD reported third-quarter revenue of $6.8 billion, surpassing analyst expectations of $6.71 billion. The chipmaker also reported earnings of 92 cents per share, matching analysts' forecasts, according to Benzinga Pro.

Prior to the earnings, analysts highlighted concerns about AMD's ability to maintain a profitable business model in the face of stiff competition from Nvidia and Intel Corp (INTC  ).

Earlier this month, AMD's stock saw a 5% increase in the week following the 2024 U.S. presidential election.

Price Action: AMD shares closed Wednesday's session down by 3.01%, finishing at $139.30. However, in after-hours trading, the stock saw a slight uptick, rising to $139.41 as of the latest update.