It's anyone's guess how Advanced Micro Devices' (AMD -5.78%) stock will react to the company's fourth-quarter earnings report, scheduled for after the market closes on Tuesday, Jan. 31. It's also anyone's guess whether the company will exceed or fall short of analyst expectations.

There's a lot of uncertainty because the two core businesses that comprise AMD, server chips and PC chips, are performing very differently. AMD is killing it in the data center, with its latest Genoa server chips trouncing Intel's (INTC -1.60%) best in terms of performance and efficiency.

In the PC market, the situation is flipped. Not only is demand for PCs crashing hard, but AMD's latest Ryzen CPUs are no match for Intel's Raptor Lake.

Becoming a server chip powerhouse

Efficiency matters in the world of server chips. When a cloud computing company chooses a server CPU, for example, they pay the up-front cost, plus the cost to run that chip over the span of years. Raw performance is important, but total cost of ownership is where market share is won and lost.

Intel's chronic delays getting its Sapphire Rapids server CPUs to market and AMD's use of TSMC's advanced manufacturing nodes have upended the server CPU market. AMD's latest Genoa server chips look like they'll win plenty of market share for AMD.

In Tom's Hardware's review of a subset of Genoa chips, the tech site concluded that AMD's latest chips beat Intel across the board. Massive core counts ensured that Genoa easily won in multithreaded workloads, and the chips even won in lightly threaded workloads. Those high core counts enable customers to deploy fewer servers, thus improving the total cost of ownership picture compared to Intel's chips.

That review came before Intel officially launched its Sapphire Rapids chips in January, but it's unlikely that launch will dramatically change things. Intel has focused on offering special-purpose accelerators, which will certainly appeal to some customers, but it's likely that AMD will maintain the overall advantage. While data center and cloud computing customers are becoming more cautious, AMD has plenty of room to steal market share from Intel. Therefore, AMD's fourth-quarter results for its data center segment should be strong.

A PC catastrophe

AMD has made an incredible comeback in the PC CPU market. Through multiple generations of its Ryzen chips, the company has clawed its way back to being highly competitive with market leader Intel. The company even briefly surpassed Intel in terms of single-threaded performance, critical for gaming.

But the tables have now turned at the worst possible time. AMD's latest Ryzen 7000 desktop CPUs are just not great products relative to Intel's Raptor Lake chips. They're priced too high, fall short in terms of performance, and require expensive motherboards and pricey DDR5 memory.

These latest Ryzen chips have been selling well below suggested prices at retail for months. Retail prices for AMD's last-gen Ryzen 5000 chips have also fallen off a cliff.

This is happening just as the PC market implodes. Global PC shipments crashed 28.5% year over year in the fourth quarter, a harsh correction following a period of booming demand during the first two years of the pandemic. AMD has inferior products in the worst PC market environment in recent memory. That's not where you want to be.

Weak end-market demand for PCs is being compounded with the whole PC supply chain aggressively reducing inventories. AMD's client segment saw revenue tumble 40% year over year in the third quarter of 2022, and operating profit completely vanished. Given how much the PC market deteriorated to close out the year, an even worse performance is possible in the fourth quarter.

The inventory corrections will eventually work themselves out, but it's clear that the boom in demand for PCs is over. With the pandemic tailwind gone, AMD will need to figure out a way to beat Intel if it wants to hold onto its market share gains.

Expect a mixed bag earnings report

"Data center good, PC bad" will be the theme of AMD's fourth-quarter report. Expect the company's gross margin to deteriorate as pricing pressure guts the profitability of the PC chip business, although the acquisition of Xilinx will help on that front.

If the data center business shows any signs of a slowdown or if the company's outlook is worse than expected, the stock could be in for a big post-earnings decline.