Advanced Micro Devices CEO Lisa Su defended the company's lackluster forecast, telling CNBC on Wednesday that the chipmaker has seen a step up in demand in recent months as shares plummeted 17% for their worst session since May 2017.

"What I would tell you from someone on the inside is AI is accelerating at a pace that I would not have imagined," she told CNBC's "Squawk on the Street," adding that demand continues to outstrip compute needs.

Su said AMD's data center business has accelerated from the fourth to first quarter and demand for its central processing units is "going gangbusters" as businesses rapidly increase compute for AI enterprise work.

The company posted fourth-quarter results Tuesday that topped Wall Street's expectations but were overshadowed by what some analysts viewed as a weak outlook.

AMD said it expects $9.8 billion in revenue, plus or minus $300 million, during the first quarter. Expectations were for $9.38 billion.

Some analysts anticipated a far stronger outlook from the company, fueled by heightened AI spending and massive data center buildouts.

AMD also had a high bar to clear this quarter following a wave of megadeals in the fourth quarter, including partnerships with OpenAI and Oracle in the fourth quarter. Companies have also been boosting investments as the need for data centers to power AI tools continues to skyrocket.

Su told CNBC that AMD will see an "inflection point" in the second half as it begins shipping its new integrated server-scale AI system known as Helios and that the company is on track with the launch.

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