AMD Q2 Earnings: Beating Expectations, Shares Slip

AMD posted Q2 earnings of $0.48 per share, in line with estimates, and revenue of $7.68 billion, beating forecasts. Despite strong results, the stock slipped in after-hours trading, potentially due to high pre-earnings expectations and an overbought stock. Technical analysis suggests a bearish gap at today's open, with key support near the $150 psychological level. The stock may experience a healthy correction before potentially resuming its rally, supported by AMD's solid fundamentals.

Advanced Micro Devices (AMD) reported its second-quarter (Q2) 2025 financial results on August 5, 2025, with earnings per share (EPS) of $0.48, in line with analyst estimates, and revenue of $7.69 billion, beating forecasts. However, the stock slid about 5% in extended trading [1].

Key Financial Highlights

- Earnings per Share (EPS): Adjusted EPS was $0.48, meeting expectations of $0.49.
- Revenue: Revenue of $7.69 billion exceeded expectations of $7.42 billion.
- Gross Margin: Adjusted gross margin was 43%, which would have been 54% without the export control costs.
- Net Income: Net income during the quarter was $872 million, or $0.54 per share, up from $265 million, or $0.16 per share, in the year-ago period.

Segment Performance

- Data Center: Revenue in the data center segment was $3.2 billion, up 14% year-over-year (YoY), driven by strong demand for EPYC server CPUs.
- Client and Gaming: Revenue in this segment was $3.6 billion, up 69% YoY, with client revenue at $2.5 billion and gaming revenue at $1.1 billion.

Regulatory Challenges

AMD faced significant challenges due to U.S. export controls on its AI chips, particularly the MI308, which was previously barred for export to China. This cost the company $800 million in the June quarter [1]. However, AMD expects shipments to resume after the Trump administration signaled approval of waivers. The company's outlook for the current quarter does not include any revenue from the MI308, and its license applications are currently being reviewed by the Department of Commerce.

Product Launches and Partnerships

During the quarter, AMD announced new AI chips called the Instinct MI400, expected to hit the market next year. OpenAI CEO Sam Altman committed to using AMD's newest GPUs. Additionally, AMD launched the Instinct MI350 series, Radeon RX 9060 XT, and EPYC 4005, and strengthened its partnerships with firms like Meta, OpenAI, Oracle, and Microsoft.

Outlook

AMD expects sales of $8.7 billion for the current quarter, plus or minus $300 million, versus expectations of earnings of $8.3 billion [1]. The company's adjusted gross margin is expected to be 45% for the current quarter.

Stock Performance

Despite strong results, AMD's stock slipped in after-hours trading. Technical analysis suggests a bearish gap at today's open, with key support near the $150 psychological level. The stock may experience a healthy correction before potentially resuming its rally, supported by AMD's solid fundamentals.

References

[1] https://www.cnbc.com/2025/08/05/amd-earnings-report-2q-2025.html
[2] https://www.theglobeandmail.com/investing/markets/stocks/AMD/pressreleases/33911736/amd-amd-q2-revenue-jumps-32/