Advanced Micro Devices (AMD) Stock: AI Growth Can’t Offset Mixed Q2 Results

TLDR

Table of Contents

AMD posted mixed Q2 results with earnings per share of $0.48 missing estimates but revenue of $7.6 billion beating expectations
Stock fell over 5% premarket despite better-than-expected Q3 revenue guidance of $8.4-$9 billion versus analyst estimates of $8.3 billion
Company took an $800 million hit from Trump administration’s China chip ban, resulting in $155 million operating loss for the quarter
Data center revenue rose to $3.2 billion while client business generated $3.6 billion, beating expectations
AMD launched new MI350 series AI chips to compete with Nvidia, with CEO citing “very strong” customer interest in upcoming MI400 series

AMD reported mixed second-quarter results Tuesday, delivering revenue that topped Wall Street estimates while missing on earnings per share. The chip maker’s stock dropped more than 5% in premarket trading despite providing better-than-expected guidance for the current quarter.

The company posted adjusted earnings per share of $0.48, falling short of the $0.49 consensus estimate. Revenue came in at $7.6 billion, beating analyst expectations of $7.4 billion.

For the third quarter, AMD guided to revenue between $8.4 billion and $9 billion. The midpoint of $8.7 billion exceeded Wall Street’s consensus estimate of $8.3 billion.

$AMD JUST REPORTED EARNINGS
EPS of $0.48 beating expectations of $0.40🟢
Revenue of $7.7B beating expectations of $7.42B🟢 pic.twitter.com/cB2d2csldC
— Evan (@StockMKTNewz) August 5, 2025

The Trump administration’s China chip ban created headwinds for AMD during the quarter. The company faced an $800 million impact from restrictions on selling its MI308 AI chips to China.

This resulted in an operating loss of $155 million for the quarter. Trump reversed the ban last month, which should help AMD recover some losses in coming quarters.

Data Center Growth Drives Performance

AMD’s data center segment generated $3.2 billion in revenue, up 14% from the prior year. The figure met Wall Street expectations and represents continued growth in the company’s AI business.

CEO Lisa Su highlighted robust demand across AMD’s computing and AI product portfolio. She noted the company is “well positioned to deliver growth in the second half of the year.”

The client business, which includes desktop and laptop CPUs, brought in $3.6 billion in revenue. This exceeded the anticipated $2.5 billion and showed strength beyond the data center market.

New AI Chips Enter Competitive Landscape

AMD launched its MI350 series AI chips during the quarter to compete directly with Nvidia. The lineup includes the MI350X and MI355X processors designed for data center applications.

According to AMD, the MI350 line offers four times the AI compute performance of previous generations. The chips also provide a 35x increase in inferencing capabilities compared to predecessors.

Customer interest in AMD’s upcoming MI400 series appears strong based on early feedback. Su described demand for next year’s chip release as “very strong” during the earnings call.

AMD completed its acquisition of ZT Systems in March to strengthen its position in rack-scale AI solutions. The deal gives AMD expertise in designing complete server systems that integrate chips, networking, and software.

The acquisition positions AMD to compete with Nvidia’s full-stack approach to AI infrastructure. Nvidia has been moving the market toward comprehensive rack-scale solutions rather than individual chip sales.

AMD stock has gained 44% year-to-date compared to 32% for Nvidia shares. Over the past 12 months, AMD is up 29% while Nvidia has risen 77%.

The semiconductor sector has benefited from increased capital expenditure spending by major technology companies. Large tech firms have raised their AI infrastructure investments throughout the current earnings season.

Su emphasized that AMD is in the early stages of an industry-wide AI transformation. She expects this shift to drive increased compute demand across all of AMD’s market segments.

The company reported being well-positioned for revenue and earnings growth over the coming years. However, investors appeared to want stronger results after the stock’s recent rally.

AMD shares traded at $164.78 in premarket activity, down from Tuesday’s closing price of $174.31.

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