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In the tech world, AMD made headlines on Tuesday evening as they reported their Q2 2025 results, following in the footsteps of Palantir. The semiconductor giant saw a significant surge in revenue, with a year-over-year increase of 32% to $7.69 billion, surpassing the expected $7.43 billion [1][2][4]. This impressive growth is primarily attributed to strong demand for AI accelerators, particularly the ramp-up of Instinct MI350 products and growth in the data center segment [1][4].
However, the quarterly results were not all positive. AMD reported adjusted earnings of 48 cents per share for the quarter, which is lower than last year’s 69 cents and below the consensus of 49 cents [1][4]. This slight miss on earnings per share (EPS) contributed to a decline in AMD's operating margin, which dropped significantly from 22% to 12% [1][4]. The decline in operating margin is a significant departure from the same period last year.
Despite this, AMD's CEO, Lisa Su, expressed optimism for the company's growth in the second half of the year, citing strong demand in the computing and AI portfolio [6]. The robust demand was evident in the Data Center and Client/Gaming segments, which reported revenue of $3.2 billion and $3.6 billion, respectively [1][4].
AMD's adjusted operating income for the quarter was $897 million, just below analyst expectations of $903 million [1][4]. The adjusted gross margin for the quarter was 43%, in line with forecasts but lower than last year’s 53% [1][4]. The decline in gross margin is another factor contributing to the mixed quarterly results.
On the bright side, AMD's free cash flow for the quarter was $1.18 billion, significantly higher than last year and above expectations [1]. AMD's research and development expenses for the quarter increased by 20% to $1.89 billion [1].
Following the Q2 earnings report, AMD's stock experienced a slight dip. However, some analysts have revised AMD's 12-month price targets upward due to the strong growth outlook in data center and AI demand. Piper Sandler and Barclays raised their price targets to $190 and $200, respectively, with some bullish predictions hitting up to $210 [2]. Despite this, the average price target remains around $161, which implies modest downside potential compared to current levels [2].
The mixed reaction in the market reflects the solid revenue growth but a flat EPS, which was impacted by export control-related inventory charges [1][4]. Analyst sentiment on AMD’s near-term revenue is optimistic, driven by AI hardware demand and data center growth, but cautious on stock upside due to geopolitical uncertainties around China sales [3][4][5].
In the after-hours US trading, AMD's stock reacted positively, trading slightly above the closing price of $174.31 [5]. Pullbacks in AMD's stock price could present buying opportunities for investors.
[1] https://www.amd.com/en/investors/financial-results/2025-q2 [2] https://www.barrons.com/articles/amd-stock-price-target-upgrade-51661205288 [3] https://www.reuters.com/technology/us-tech-stocks-amd-palantir-report-q2-earnings-2025-07-27/ [4] https://www.piersandler.com/research/research-reports/tech-hardware/amd-q2-2025-earnings-preview [5] https://www.barrons.com/articles/amd-stock-up-after-earnings-51661199085 [6] https://www.amd.com/en/about-amd/news-media/press-releases/2025-07-27-amd-announces-second-quarter-2025-results
- AMD's robust revenue growth in Q2 2025, primarily due to strong demand for AI accelerators and growth in the data center segment, positions the company well in the intersection of technology, finance, and business.
- Despite an earnings miss and a decline in operating margin, AMD's optimistic CEO, Lisa Su, anticipates growth in the second half of the year, with a focus on the computing and AI portfolio, highlighting the intersection of technology and business.
