Advanced Micro Devices Reported Record Revenue. AMD Stock Sank Anyway.
Leading chip firm Advanced Micro Devices (AMD) reported blowout second-quarter earnings, firing on all engines and surpassing Street’s expectations. However, the market’s reaction was harsh. The stock dropped 7% intraday on Aug. 5 after the results, shedding the 7% it had gained on Aug. 4 in anticipation. The reason for this drop is heightened expectations…
Leading chip firm Advanced Micro Devices (AMD) reported blowout second-quarter earnings, firing on all engines and surpassing Street’s expectations. However, the market’s reaction was harsh. The stock dropped 7% intraday on Aug. 5 after the results, shedding the 7% it had gained on Aug. 4 in anticipation. The reason for this drop is heightened expectations from investors, as they anticipated more from AMD.
On paper, AMD has been a big winner regarding its Q2 earnings. The company’s shares have been running high due to the growing popularity of its artificial intelligence (AI) chips, as well as a resurgence in demand for its CPUs. Notably, the company has also raised expectations for the semiconductor market, projecting it to reach $2 trillion per year by 2028.
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AMD is vying for more market share from its main competitor and market leader, Nvidia Corporation (NVDA). The company launched its first rack-scale system, called Helios, in the last quarter, and now it’s looking to start shipping the technology. This directly competes with Nvidia’s complete systems, not just its chips. AMD also expects its data center sales to accelerate in the second half of 2026, as Helios shipments are forecasted to ramp in the fourth quarter.
About AMD Stock
AMD is a leading semiconductor company headquartered in Santa Clara, California, producing processors and graphics chips for PCs, gaming, data centers, and AI applications. With a $798 billion market capitalization, it has emerged as a major alternative to Nvidia for hyperscalers. Although Nvidia remains dominant, AMD is gaining ground through its Instinct accelerators and Helios rack-scale AI platform, which competes with Nvidia’s Grace Blackwell and Vera Rubin systems.
Investors have priced in the hefty surge in AI demand for AMD’s stock. This is paired with strong data-center growth, improving earnings, and major partnerships, which have become a strong tailwind for the chipmaker. Over the past 52 weeks, the stock has gained 177.28%, while it is up 123.2% year-to-date (YTD). It reached a 52-week high of $584.73 on June 30, but is down 18% from that level. On the back of the post-earnings dip, its stock is down 7.38% over the past month.
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The sell-off was long coming after the stock practically skyrocketed. On a forward-adjusted basis, its price-to-earnings (non-GAAP) ratio of 63.43x is considerably stretched compared to the industry average of 24.14x.
AMD Posted Record Q2 Revenue as Data Center Sales Double
Quarter-over-quarter (QOQ), AMD keeps proving that its data center business is growing at an unprecedented speed. In the second quarter, the company’s data center revenue increased 107% year-over-year (YOY) to $6.70 billion, as its AMD EPYC processors and AMD Instinct GPUs continued to face solid demand.
AMD’s total revenue increased 50% YOY to $11.54 billion, higher than the $11.28 billion Wall Street analysts (as polled by LSEG) had expected. AMD also highlighted that data center operations account for 58% of its top line. Therefore, while there is modest growth in the client and gaming segment, data centers more than make up for it.
As a result of the AI-led top-line surge, the company’s bottom line also climbed at a robust pace. Its non-GAAP operating income climbed by 245% YOY to $3.09 billion. Its non-GAAP EPS also rose 246% from its year-ago value to $1.66, surpassing the $1.62 that Street analysts had expected. AMD expects about $13 billion in revenue for the current quarter, plus or minus $300 million.
Wall Street analysts are robustly optimistic about AMD’s future earnings. They expect the company’s EPS to climb by 67% YOY to $1.62 for the current quarter. For fiscal 2026, EPS is projected to surge 93.9% annually to $6.34, followed by a 98.6% growth to $12.59 in fiscal 2027.
What Do Analysts Think About AMD’s Stock Post Its Q2 Results?
After AMD’s solid second-quarter results, analysts at Argus Research raised the price target from $450 to $625, while maintaining a “Buy” rating on the stock. Argus analysts cited its results, as well as new AI and HPC product launches, keeping the growth momentum intact. Rosenblatt analysts kept a “Buy” rating and raised the price target from $665 to $700. The firm believes that AMD’s product lineup has positioned the company for solid growth, as the Q2 results showed that the company’s expansion is not slowing down.
Wells Fargo analysts also kept an “Overweight” rating and raised the price target from $615 to $700. The firm now expects AMD’s revenue to grow at a compound annual rate of more than 35% through 2030, while EPS is projected to materially surpass its earlier $20 target for 2029-2030. Truist Securities analysts also raised the price target from $478 to $594 but kept a “Buy” rating, citing improving product performance, accelerating customer demand, and strong execution driving AMD’s outlook.
Chip giant AMD is a widely followed name on Wall Street, with analysts awarding it a consensus “Strong Buy” rating. Of the 45 analysts rating the stock, a majority of 36 analysts have given it a “Strong Buy” rating, two analysts rated it “Moderate Buy,” while seven analysts are taking the middle-of-the-road approach with a “Hold” rating. The consensus price target of $603.10 represents a 25.5% upside from current levels. Moreover, the Street-high price target of $1,250 reflects a 160.2% upside.
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On the date of publication, Anushka Dutta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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