TLDR
- AMD stock dropped 6% after reporting Q2 2025 earnings of 48 cents per share, missing analyst expectations of 49 cents
- AI business revenue declined year-over-year due to U.S. export restrictions eliminating MI308 chip sales to China
- AMD provided Q3 revenue guidance of $8.7 billion, beating analyst estimates of $8.3 billion despite China headwinds
- Cathie Wood’s ARK Investment Management bought approximately $38 million in AMD shares following the earnings dip
- Wall Street analysts remain cautious about timing of China AI chip shipment restart and datacenter GPU growth potential
Advanced Micro Devices stock tumbled over 6% in Wednesday trading after the semiconductor company reported mixed second-quarter 2025 results. AMD’s adjusted earnings per share of 48 cents fell short of the 49 cent Wall Street consensus estimate.
The AMD stock decline came despite strong revenue performance. Revenue climbed 32% year-over-year to $7.69 billion, beating analyst expectations of $7.42 billion.
Net income for AMD jumped to $872 million, or 54 cents per share. This compared favorably to $265 million in the prior year period.
CEO Lisa Su highlighted U.S. export restrictions as a key challenge during AMD’s earnings call. “AI business revenue declined year over year as U.S. export restrictions effectively eliminated MI308 sales to China,” Su explained.
AMD had previously warned investors of an $800 million revenue hit in Q2 due to chip export restrictions. The company said in July it plans to resume Chinese AI chip shipments once regulatory reviews restart.
AMD’s Q3 2025 revenue guidance of $8.7 billion exceeded analyst estimates of $8.3 billion. However, this guidance excludes potential revenue from the MI308 AI chip designed for the China market.
Su told CNBC that AMD has been working with the Trump administration on license requirements for Chinese chip shipments. The CEO took a “prudent” approach to guidance given regulatory uncertainty.
AMD Stock Faces Wall Street Skepticism
Morgan Stanley analysts called the timing of China AI chip shipment restarts “vague” in their AMD stock analysis. They noted AMD requires “near terms upside in GPU” to maintain its premium stock valuation.
Bernstein analysts expressed similar caution about AMD stock prospects. “China upside sounds like it will take time to materialize,” they wrote, citing inventory risks and rising operating expenses.
Goldman Sachs raised concerns about AMD’s datacenter GPU scaling ability. The investment firm questioned whether AMD stock can achieve operating leverage given expenses needed for software development.
AMD’s datacenter business grew 14% to $3.2 billion during Q2 2025. This segment includes central processors and graphics processing units used in AI applications.
The datacenter segment represents a crucial growth driver for AMD stock performance. Revenue from this business continues expanding despite broader semiconductor industry challenges.
Cathie Wood Buys AMD Stock Dip
Despite the AMD stock selloff, prominent investor Cathie Wood increased her position. ARK Investment Management purchased approximately $38 million worth of AMD shares across five ETFs.
The AMD stock buying spree occurred immediately after the earnings-driven decline. Wood’s ARK funds have historically focused on disruptive technology companies with long-term growth potential.
ARK Innovation ETF, ARK Next Generation Internet ETF, and three other ARK funds participated in the AMD stock purchases. This represents continued confidence in AMD’s AI chip roadmap.
Su remained optimistic about datacenter demand during the AMD earnings call. She cited strong customer forecasts and anticipated an “inflection point” in Q3 2025.
The AMD CEO emphasized datacenter as the company’s primary growth driver. “We look at that as the opportunity in front of us,” Su said regarding AMD stock prospects.
Wall Street maintains a moderate buy rating on AMD stock. The average AMD price target of $161.16 implies roughly 1.2% downside from current trading levels.
Analyst ratings include 25 buy recommendations, 10 hold ratings, and one sell rating for AMD stock. This reflects generally positive sentiment despite recent earnings concerns.
Su highlighted massive market opportunities for AMD stock growth. She described “tens of billions of dollars” in opportunities within a market exceeding $500 billion over coming years.
AMD’s Q3 guidance excludes any potential revenue from resumed China AI chip shipments. This conservative approach reflects ongoing regulatory uncertainty affecting AMD stock performance.
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