Earnings for AMD during Q2 remain on par with projections, yet revenue soars by a substantial 32%
AMD has announced its financial results for the second quarter of 2025, revealing a robust performance and an optimistic outlook for its AI segment.
The semiconductor company reported adjusted earnings per share of $0.48, matching the consensus estimate. AMD's revenue for the quarter totaled $7.68B, a year-over-year increase of 32% and surpassing the estimate of $7.43B. This growth was led by record server and PC processor sales, as stated by AMD CEO Lisa Su.
However, data center sales decreased by 12% quarter-over-quarter, while client and gaming sales increased by 23% quarter-over-quarter. This sequential sales growth was driven by CPU sales, not AI, contrary to market expectations.
Despite this, AMD's outlook for the AI segment in the second half of 2025 is optimistic. The company expects significant growth driven primarily by the ramp-up of its Instinct MI350 series AI accelerators along with EPYC server processors and Ryzen client products. AMD forecasts Q3 2025 revenue around $8.7 billion, a 28% year-over-year increase, reflecting strong demand across its AI and computing product portfolio.
Lisa Su has highlighted robust demand for AMD's AI products and expressed confidence in scaling the AI business toward tens of billions of dollars in annual revenue over the longer term. However, specific revenue forecasts remain uncertain due to export controls and other market factors, particularly regarding sales in China. The export restrictions on Instinct MI308 GPUs bound for China have impacted margins and inventory but do not dampen the expected sales growth downstream from the new MI350 series ramp in Q3 and beyond.
AMD's shares have already climbed nearly 50% year to date. Investors are not fully realizing that AMD does not report its AI sales because they may not meet the hype surrounding them. Tech Stock Pros, Investing Group Leader for Tech Contrarians, stated that the market is struggling to process AMD's Q2 beat and better-than-expected guidance.
In summary, AMD's Q3 2025 revenue projection is around $8.7B, driven in part by AI accelerator sales. The growth drivers include the Instinct MI350 series ramp, EPYC, and Ryzen share gains. China sales are impacted by export restrictions, causing uncertainty and $800M inventory charges, but AI demand remains strong elsewhere. The long-term AI sales outlook is confidently scaled-up toward tens of billions in revenue, but the precise timing and magnitude still remain unclear. This outlook indicates that AMD's AI segment will be a key growth element in the second half of 2025 despite geopolitical export challenges.
- The government may need to review and address export controls, as they are impacting AMD's AI sales in China, which could potentially affect the overall growth of the company's AI segment.
- With the ramp-up of its Instinct MI350 series AI accelerators and strong demand for AI products, AMD hopes to scale its AI business toward tens of billions of dollars in annual revenue, creating opportunities for growth in the business and technology sectors.
