TLDR
- AMD reported 36% revenue growth in Q1 2025, its fastest since 2022
- Data center revenue jumped 57% to $3.7 billion, while client (PC) segment grew 68%
- Stock has declined nearly 40% over the past year despite strong fundamentals
- Company expects continued growth with upcoming MI350 and MI400 AI accelerators
- AMD trades at a forward P/E of 26, which appears attractive given its growth trajectory
AMD’s recent financial performance shows a company gaining momentum in key markets despite its stock trading well below recent highs. The chipmaker delivered impressive first-quarter results that surprised many analysts who had been concerned about the pace of its AI business growth.
The company reported Q1 revenue of $7.44 billion, exceeding analyst expectations of $7.12 billion. This represents a 36% increase from the same period last year, marking AMD’s fastest revenue growth since 2022.
Two segments drove this strong performance. Data center revenue surged 57% to $3.7 billion, powered by demand for EPYC CPUs and Instinct GPU chips. The client segment, which includes PC processors, showed even stronger growth at 68%, reaching $2.3 billion thanks to strong demand for its Zen 5 AMD Ryzen processors.
Not all segments performed equally well. The gaming and embedded segments saw revenue declines of 30% and 3% respectively. However, these two segments now account for only 20% of AMD’s total revenue, down from 32% a year ago.
Market Share Gains and AI Progress
Under CEO Lisa Su’s leadership, AMD has transformed from an industry also-ran into a formidable competitor in multiple markets. The company has steadily gained market share from Intel in the PC processor market, a trend that appears to be continuing.
While Intel reported an 8% decline in its client segment to $7.6 billion, AMD’s competing segment grew 68%. This divergence highlights AMD’s ongoing market share gains against its larger rival.
In the AI accelerator market, AMD remains far behind Nvidia but is making progress. The company recently closed its acquisition of ZT Systems, a server maker that should help it address what AMD believes will be a $500 billion data center AI accelerator market by 2028.
Oracle plans to deploy a large-scale cluster powered by AMD’s MI355x accelerators and 5th Gen EPYC processors later this year. Amazon’s recent purchase of 822,234 AMD shares suggests a deepening partnership between the two companies.
Financial Outlook
For the second quarter, AMD expects revenue around $7.4 billion, which includes $1.5 billion in lost revenue due to new export restrictions on certain AI chips intended for China. This guidance was better than analyst expectations of $7.24 billion and represents 27% growth from the year-ago quarter.
The stock’s current valuation appears attractive given its growth trajectory. AMD trades at a forward P/E of 26, and based on 2026 estimates, it trades at a P/E of just 17. If the company maintains its current momentum, these estimates could increase, potentially driving the stock price higher.
Investors will learn more at the company’s “Advancing AI” day in June. Key developments to watch include the upcoming launch of new Instinct accelerators like the MI350 and MI400, which could strengthen AMD’s position in the AI chip market.
The stock currently trades more than 55% below its March 2024 high, creating what many analysts see as a buying opportunity for patient investors willing to look past short-term volatility.
AMD’s recent financial performance presents a compelling case for optimism. The company is showing accelerating revenue growth, market share gains against Intel, and progress in developing its AI business.
The stock’s 36% price decline over the past year appears disconnected from these improving fundamentals. With a reasonable valuation and several potential catalysts on the horizon, AMD stock could be poised for a recovery.
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