AMD Stock Dips Despite 32% Q2 Revenue Rise, AI Growth Ignored

AMD Q2 2025: Revenue Soars 32% to $7.7B but Margins Slip on Inventory Write-Downs, AI Growth Drives Optimism

  • AMD shares fell 1.4% in after-hours trading after posting 32% revenue growth for Q2 2025.
  • Revenue reached $7.7 billion, but earnings per share dropped to $0.48 mainly due to an $800 million inventory write-down tied to export controls.
  • Gross margin declined to 43% from 53% last year, with margin pressure overshadowing strong processor sales.
  • Growth in AMD’s AI business, including the early production of MI350 accelerators, drove future optimism and customer interest.
  • Despite falling stock prices, company leaders highlighted long-term opportunities in AI and ongoing server CPU market share gains.

AMD experienced a 1.4% decline in aftermarket trading despite reporting a strong 32% surge in revenue for the second quarter of fiscal year 2025, closing at $176.78. The report surprised investors who had anticipated growth momentum following the company’s earnings release.

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In Q2 2025, AMD’s revenue climbed to $7.7 billion, primarily driven by increased sales of EPYC and Ryzen processors in both cloud computing and enterprise markets. However, the company’s earnings per share fell to $0.48 from $0.69 a year earlier. This decline stemmed in part from an $800 million inventory write-down, which was linked to export controls affecting AI chip sales to China. As a result, gross margin dropped to 43%, down from 53% in the previous year.

CEO Lisa Su stated, “We delivered very strong second quarter results with revenue exceeding the midpoint of guidance as higher EPYC and Ryzen processor sales more than offset headwinds from export controls that impacted Instinct sales.” CFO Jean Hu added, “The strategic investments we’re making position us to capitalize on the expanding AI opportunities across all our end markets.”

The company began high-volume production of its MI350 series AI accelerators ahead of schedule, increasing its competitive stance in the AI hardware sector. AMD forecasted third-quarter revenue of approximately $8.7 billion, representing a 28% increase year-over-year, but this forecast excludes potential MI-308 chip sales to China, which are currently under export license review.

Despite recent market uncertainty, AMD has posted its 33rd consecutive quarter of server CPU market share gains. Technical metrics show the company is trading near its 52-week high of $182.50, with a price-to-earnings (P/E) ratio above 127, reflecting high growth expectations. With a market beta of 1.94, AMD stock remains more volatile than general market averages.

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Other highlights from the earnings call pointed to long-term growth opportunities in sovereign AI projects and expanded deployments among large enterprise clients, which could drive additional revenue into 2026. While short-term margin pressures impacted the quarter, AMD maintains a strong position in the growing AI infrastructure market.

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