AMD Stock Drops 9% After Earnings Beat But AI GPU Growth Disappoints
Q2 Revenue Surprises to the Upside, But Investors React to Slower AI Data Center Sales Despite Strong Overall Guidance
Advanced Micro Devices (NASDAQ: AMD) reported its second-quarter 2025 earnings after the bell yesterday, posting better-than-expected sales and in-line earnings, but shares fell sharply Wednesday morning as investor enthusiasm for its AI business faced a dose of reality.
By 11 a.m. ET, AMD stock had declined 9.2%, as the company’s performance in the artificial intelligence (AI) data center GPU market came in weaker than expected, casting a shadow over what was otherwise a solid earnings report with strong forward guidance.
AMD Q2 2025 Earnings Snapshot
AMD’s second-quarter financials were a mixed bag that leaned positive:
| Metric | Wall Street Estimate | Actual |
|---|---|---|
| Revenue | $7.43 billion | $7.69 billion |
| Adjusted EPS (non-GAAP) | $0.48 | $0.48 |
| YoY Revenue Growth | — | +31.7% |
| Q3 Revenue Guidance | $8.32 billion | $8.4–$9 billion |
AMD delivered non-GAAP earnings per share (EPS) of $0.48, matching analyst expectations, while revenue for the quarter came in $260 million above estimates, marking a strong 31.7% year-over-year increase.
Market Reaction: Why the Stock Is Down 9%
Despite delivering on key financial metrics and offering an upbeat revenue outlook for Q3, investors were underwhelmed by the composition of AMD’s revenue — particularly regarding the company’s progress in AI-focused GPUs for data centers, a highly anticipated growth driver for the company.
Weak AI GPU Momentum Disappointed Investors
Over the past year, AMD’s stock had been increasingly priced based on future AI growth potential, particularly its ability to compete with Nvidia in the lucrative market for AI accelerators. But in Q2, revenue from AI GPUs fell short of investor expectations, as the company’s performance was driven more by traditional CPUs and gaming GPUs — segments that, while profitable, carry lower margins and less long-term excitement\
.”Investors have been looking to AI GPUs as AMD’s golden goose. But this quarter suggests it’s not quite laying those eggs yet,” said market strategist Caroline Jameson of TechEquity Insights.
Deep Dive: Revenue Composition Shift
AMD’s results showed strength in PC and server CPUs and gaming GPUs, but the company’s AI data center GPU segment, including its MI300X accelerator, underperformed relative to expectations.
While AMD did not break out exact revenue figures by product line, the earnings call and commentary made it clear that AI-related sales didn’t carry the quarter, raising concerns about how quickly AMD can scale its AI GPU business to compete with entrenched leader Nvidia (NASDAQ: NVDA).
Q3 Guidance: The Silver Lining
Despite the AI miss, AMD gave a strong forward sales forecast that should not be overlooked.
Q3 Revenue Outlook:
- Guidance Range: $8.4 billion to $9.0 billion
- Analyst Consensus: $8.32 billion
- Implied YoY Growth: ~28% (at midpoint)
The company’s 28% projected growth for Q3 is a solid indicator of operational momentum — one that suggests the business is still firing on multiple cylinders, even if AI GPU sales aren’t yet leading the charge.
Long-Term Opportunity Still Intact?
For long-term investors, AMD’s selloff could represent a buying opportunity. While short-term traders are reacting to a single-quarter miss in a key growth segment, AMD continues to:
- Grow revenue aggressively
- Gain share in CPUs vs. Intel
- Expand its product pipeline for AI and HPC
- Strengthen relationships with cloud providers
