AMD Q2 Earnings Miss Estimates, Revenue Tops Expectations

AMD reported Q2 earnings that missed estimates, with EPS of 48 cents vs. 49 cents expected and revenue of $7.69 billion vs. $7.42 billion expected. The company's net income increased to $872 million, or 54 cents per share, from $265 million, or 16 cents per share in the year-ago period. AMD expects sales of $8.7 billion, plus or minus $300 million, for the current quarter.

Advanced Micro Devices (AMD) reported its second-quarter (Q2) 2025 financial results, showing a mixed performance that missed analysts' expectations but demonstrated strong growth across several segments. The company reported earnings per share (EPS) of 54 cents, falling short of the expected 49 cents, and revenue of $7.69 billion, slightly below the projected $7.42 billion. Despite these misses, AMD's net income surged to $872 million, or 54 cents per share, compared to $265 million, or 16 cents per share in the year-ago period.

The company's Q2 revenue was driven by a 32% year-over-year increase in data center and client/gaming segments, reaching $3.2 billion and $3.6 billion, respectively. The data center segment saw a 14% year-over-year revenue growth, while the client/gaming segment surged by 69%. However, AMD faced significant headwinds from U.S. export restrictions on its MI308 data center GPU products sold to China, resulting in approximately $800 million in inventory and related charges.

Looking ahead, AMD expects revenue of approximately $8.7 billion, plus or minus $300 million, for the current quarter. The company's non-GAAP gross margin is expected to rebound to approximately 54%. Notably, this guidance excludes any potential revenue from MI308 shipments to China as license applications remain under review.

Analysts remain bullish on AMD's stock despite the Q2 earnings miss. Of the 10 analysts with current ratings tracked by Visible Alpha, six have "buy" or equivalent ratings, alongside four "hold" ratings, with price targets ranging from $111 to $210. UBS and Bank of America recently raised their price targets for AMD stock, reflecting optimism about the company's ability to obtain necessary approvals to restart exports of its MI308 chips to China.

In a strategic move, AMD announced plans to sell ZT Systems' data center infrastructure business to Sanmina for $3 billion. This divestment is expected to streamline operations and maintain manufacturing capabilities through a partnership.

Overall, while AMD's Q2 earnings missed estimates, the company's strong growth in data center and client/gaming segments, coupled with a robust product roadmap, positions it well for continued growth across its key business segments, particularly in high-margin AI and data center markets.

References:
[1] https://www.investopedia.com/what-analysts-think-of-amd-stock-ahead-of-earnings-q2-fy2025-update-11783465
[2] https://www.stocktitan.net/news/AMD/amd-reports-second-quarter-2025-financial-5g90pseu2cgu.html