AMD Earnings Preview: Can Another AI Beat Push Shares Through Key Resistance?

Advanced Micro Devices (AMD) reports second-quarter earnings after Tuesday's closing bell, with expectations running about as high as they have at any point in the company's history. The stock has more than doubled this year as investors increasingly embrace AMD as the clear No. 2 player behind NVIDIA (NVDA) in artificial intelligence infrastructure, while a series of product announcements, hyperscaler wins and bullish analyst upgrades have fueled one of the strongest rallies in the semiconductor sector.

That optimism has also raised the stakes heading into earnings.

Shares are now testing important technical resistance near the 20-day moving average around $515. A convincing earnings beat accompanied by stronger guidance could set the stage for a breakout toward the next major resistance zone between $560 and $580. Conversely, after such a potential rally, even a solid report could disappoint if management fails to raise expectations enough to justify AMD's premium valuation.

Wall Street expects AMD to report adjusted earnings of approximately $1.61 per share on revenue of roughly $11.3 billion, representing earnings growth of more than 230% and revenue growth approaching 50% from a year ago. Those figures alone highlight just how dramatically AMD's AI business has transformed the company over the past 18 months.

The company has built an impressive record of execution, beating revenue estimates in every quarter over the past two years while topping earnings expectations nearly 90% of the time. Analyst revisions have also moved steadily higher ahead of this report, with more than 30 upward EPS revisions over the past three months and virtually no reductions. That trend reflects growing confidence that AMD's AI accelerator business continues to accelerate, but it also leaves very little room for error.

The biggest focus once again will be the Data Center segment.

During the first quarter, Data Center revenue climbed 57% year over year to $5.8 billion, powered by accelerating demand for EPYC server processors and Instinct AI accelerators. Management called the quarter an "inflection point" and projected server CPU revenue would grow more than 70% year over year during the second quarter. Investors will want confirmation that growth is meeting—or exceeding—that ambitious target.

Equally important will be commentary surrounding AMD's rapidly expanding AI ecosystem.

Over the past several weeks, management has unveiled one of the most aggressive AI roadmaps in the industry. At its Advancing AI event, AMD introduced its Helios rack-scale platform featuring MI455 GPUs, next-generation EPYC Venice CPUs and Pensando networking hardware. Management also committed to annual platform upgrades through the MI500 and MI600 generations, attempting to close the technology gap with NVIDIA while giving hyperscalers a credible second source for AI infrastructure.

Customer announcements have only reinforced that momentum.

Meta Platforms (META), OpenAI and Anthropic have all committed to deploying AMD's next-generation AI hardware, with OpenAI and Meta expected to deploy roughly six gigawatts each and Anthropic committing up to two gigawatts of MI450 capacity. Those announcements have dramatically increased analyst confidence that AMD's AI accelerator business could grow much faster than previously expected.

Several research firms responded by raising price targets aggressively. UBS lifted its target to $730, Jefferies to $640, Stifel to $635, Wells Fargo to $615, Benchmark to $685 and Melius to $660 following AMD's AI event, with many analysts now projecting substantially higher earnings power by 2028 than previously anticipated. The common theme across those upgrades is that investors are beginning to appreciate not only AMD's GPU opportunity but also the accelerating growth of its server CPU franchise.

Outside Data Center, investors will also monitor AMD's remaining business segments.

The Client division has benefited from improving enterprise PC demand and AI-enabled notebook refresh cycles. Management has previously warned that consumer PC shipments could soften later this year, making updated commentary especially important.

The Gaming business remains the weakest portion of the portfolio. AMD has already indicated gaming revenue is likely to decline meaningfully during the second half as console demand matures and component costs remain elevated. Investors largely expect this weakness, but any stabilization would be viewed positively.

The Embedded segment continues providing steady, high-margin revenue following the Xilinx acquisition, although it has become a smaller driver compared to the rapidly expanding AI business.

Margins will represent another critical discussion point.

AMD guided toward approximately 56% gross margin entering the quarter, following a 55% margin during Q1. Investors will be looking for evidence that the richer mix of server CPUs and AI accelerators continues lifting profitability, while also monitoring whether next-generation MI450 deployments pressure margins during the initial production ramp.

Management has acknowledged that AI accelerators initially generate margins below the corporate average before improving as production scales. How quickly those margins expand could become an increasingly important driver of earnings over the next several years.

Another closely watched topic will be capital spending and supply.

Management has repeatedly emphasized that supply remains tight across advanced packaging, memory and data-center infrastructure. Investors will want updates on wafer availability, manufacturing capacity and whether supply constraints are easing enough to support accelerating AI deployments through late 2026 and 2027.

The options market suggests traders are preparing for significant volatility.

Current pricing implies roughly an 8.5% post-earnings move, translating into an expected trading range of approximately $440 to $523 immediately following the report. Activity has favored calls in recent sessions, although overall open interest remains slightly tilted toward puts, indicating investors continue carrying downside protection after the stock's remarkable rally. The largest longer-dated call positioning remains centered around the $500 strike, underscoring that level's importance following earnings.

Valuation remains perhaps the biggest debate.

Even after recent gains, bullish analysts argue AMD's earnings trajectory justifies additional upside as AI infrastructure spending accelerates and server CPU market share continues expanding. Many now forecast adjusted earnings approaching $20 per share within several years if current deployment plans materialize.

Skeptics counter that much of that optimism is already reflected in the stock price. AMD currently trades at roughly 90 times forward earnings and nearly 16 times forward sales, leaving little margin for disappointment. Critics also question whether hyperscaler AI spending can maintain its current pace indefinitely and whether increasing competition—including open-source AI models and custom silicon—could eventually reduce GPU demand.

Ultimately, this report is unlikely to hinge on whether AMD beats consensus estimates—it probably needs to. The real question is whether management can convince investors that AI demand continues accelerating enough to support today's premium valuation. If Lisa Su delivers another confident outlook on Helios deployments, EPYC market share gains and hyperscaler spending, the technical setup could quickly improve, with a breakout above the $515 resistance area opening the door toward the $560-$580 region. If guidance merely meets expectations, however, investors may decide much of AMD's AI success has already been priced in after one of the market's most impressive rallies.