Why Did AMD Stock Plunge 4.84% Despite Revenue Surge?

On August 6, 2025, Advanced Micro Devices (AMD) experienced a significant drop of 4.84% in pre-market trading, reflecting investor concerns and market sentiment.

AMD reported a revenue of $7.70 billion for the second quarter of 2025, surpassing analysts' estimates. However, the company's earnings remained flat, which contributed to the stock's decline. The earnings report indicated a loss per share of $0.01, slightly better than the estimated loss of $0.03. Despite the revenue growth of 4% annually to $1.6 billion, the market's focus on profitability led to a 4% drop in shares.

AMD's strong revenue growth in the gaming sector was offset by margin compression, impacting overall profits. The company's Q2 earnings missed profit targets, raising questions about its profitability. Additionally, AMD's restricted access to China's AI chip market is expected to result in a $1.5 billion hit to revenue this year, with most of the impact affecting the second and third quarters.

Despite beating Q2 '25 expectations, AMD's stock faced scrutiny due to limited upside potential heading into Q3. The company's adjusted diluted earnings per share came in at $0.48, slightly below estimates of $0.49. The market's reaction to AMD's earnings report highlights the importance of profitability in addition to revenue growth.