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AMD Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall
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Key Takeaways
{\"0\":\"AMD topped Q2 earnings and revenue estimates, driven by Ryzen and EPYC processor sales.\",\"1\":\"Data Center and Client segments posted double-digit growth, led by Instinct GPUs and Ryzen CPUs.\",\"2\":\"An $800M inventory write-down tied to China export controls pressured margins and weighed on shares.\"}
Advanced Micro Devices (AMD - Free Report) reported second-quarter 2025 non-GAAP earnings of 48 cents per share, which beat the Zacks Consensus Estimate by 2.13%. The figure declined 30.4% year over year.
Revenues of $7.685 billion beat the Zacks Consensus Estimate by 3.74% and increased 31.7% year over year and 3.3% sequentially. The top-line growth benefited from record sales of Ryzen and EPYC processors and higher semi-custom shipments.
AMD shares have lost 5.12% in pre-market trading. AMD stock was impacted by U.S. export controls on MI308 sales to China, leading to an $800 million inventory write-down.
AMD Q2 Topline Rides on Data Center Growth
Data Center revenues increased 14.3% year over year to $3.240 billion, accounting for 42.2% of total revenues. Sequentially, revenues decreased 11.8% quarter over quarter.
Advanced Micro Devices, Inc. Price, Consensus and EPS Surprise
AMD’s top line benefited from strong Instinct GPU shipments and robust EPYC CPU sales.
In the second quarter of 2025, AMD expanded its collaboration with Red Hat to deliver high-performance AI inference using vLLM on AMD Instinct GPUs and enhance enterprise application deployment with Red Hat OpenShift Virtualization on AMD EPYC CPUs across the hybrid cloud.
In the reported quarter, Dell Technologies (DELL - Free Report) announced its new Dell AI platform featuring the Dell Technologies PowerEdge XE9785 and XE9785L servers, optimized for performance and efficiency with AMD Instinct MI350 Series GPUs and AMD EPYC CPUs.
AMD also announced the launch of its EPYC 4005 Series processors, offering enterprise-grade features and leading performance for growing businesses and hosted IT service providers.
AMD Sees Soaring Growth in Client and Gaming Segment
In the second quarter of 2025 Client and Gaming segment revenue was $3.6 billion, up 69% year-over-year. The Client segment’s revenues soared 67.5% year over year to $2.499 billion, accounting for 32.5% of total revenues. Sequentially, revenues increased 8.9% quarter over quarter. Growth can be attributed to strong Ryzen desktop CPU sales and increased enterprise adoption across major OEMs like Lenovo, HP, and Dell Technologies.
In the second quarter of 2025, AMD announced the Ryzen Threadripper 9000WX and Ryzen Threadripper PRO 9000X Series processors, delivering leadership workstation performance for the most demanding workloads.
The Gaming segment’s revenues increased 73.1% year over year to $1.122 billion, accounting for 14.6% of total revenues. Sequentially, revenues increased 73.4% quarter over quarter. Growth was fueled by strong demand for Radeon GPUs, higher semi-custom console revenue, and collaborations with Microsoft and Sony for next-generation gaming technologies.
AMD Suffers From Weak Embedded Revenue
The Embedded segment revenues were $824 million, down 4.3% year over year but flat sequentially. The segment accounted for 10.7% of total revenues.
The decline can be attributed to a gradual recovery in demand across various markets, including test and measurement, communications, and aerospace. Additionally, inventory levels among customers in certain areas, such as the industrial sector, remained elevated, which contributed to the slower recovery.
AMD’s Margins Contract Y/Y in Q2
Non-GAAP gross margin contracted 990 basis points (bps) on a year-over-year basis to 43.3%. The decline was primarily due to an $800 million inventory write-down related to U.S. export controls restricting MI308 sales to China.
Non-GAAP operating expenses increased 32.2% year over year to $2.429 billion.
Non-GAAP operating margin was 11.7% in the second quarter, a decline from 21.7% in the year-ago quarter.
AMD’s Balance Sheet & Cash Flow
As of June 28, 2025, AMD had cash, cash equivalents and short-term investments of $5.867 billion compared with $7.310 billion as of March 29, 2025.
As of June 28, 2025, total debt was $3.21 billion compared with $4.16 billion as of March 29, 2025.
Operating cash flow was $1.462 billion compared with $939 billion in the first quarter of 2025.
Free cash flow was $1.180 billion in the second quarter of 2025 compared with $727 million in the first quarter of 2025. In the second quarter, free cash flow margin was 15%.
In the second quarter of 2025, AMD returned $478 million to shareholders through a share repurchase program. The company has $6 billion remaining under its current authorization.
AMD Initiates Q3 Guidance
AMD expects third-quarter 2025 revenues of $8.7 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 28% and sequential growth of approximately 13%.
For the third quarter, AMD expects non-GAAP gross margin to be roughly 54%. Non-GAAP operating expenses are expected to be nearly $2.55 billion.
Image: Bigstock
AMD Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Fall
Key Takeaways
Advanced Micro Devices (AMD - Free Report) reported second-quarter 2025 non-GAAP earnings of 48 cents per share, which beat the Zacks Consensus Estimate by 2.13%. The figure declined 30.4% year over year.
Revenues of $7.685 billion beat the Zacks Consensus Estimate by 3.74% and increased 31.7% year over year and 3.3% sequentially. The top-line growth benefited from record sales of Ryzen and EPYC processors and higher semi-custom shipments.
AMD shares have lost 5.12% in pre-market trading. AMD stock was impacted by U.S. export controls on MI308 sales to China, leading to an $800 million inventory write-down.
AMD Q2 Topline Rides on Data Center Growth
Data Center revenues increased 14.3% year over year to $3.240 billion, accounting for 42.2% of total revenues. Sequentially, revenues decreased 11.8% quarter over quarter.
Advanced Micro Devices, Inc. Price, Consensus and EPS Surprise
Advanced Micro Devices, Inc. price-consensus-eps-surprise-chart | Advanced Micro Devices, Inc. Quote
AMD’s top line benefited from strong Instinct GPU shipments and robust EPYC CPU sales.
In the second quarter of 2025, AMD expanded its collaboration with Red Hat to deliver high-performance AI inference using vLLM on AMD Instinct GPUs and enhance enterprise application deployment with Red Hat OpenShift Virtualization on AMD EPYC CPUs across the hybrid cloud.
In the reported quarter, Dell Technologies (DELL - Free Report) announced its new Dell AI platform featuring the Dell Technologies PowerEdge XE9785 and XE9785L servers, optimized for performance and efficiency with AMD Instinct MI350 Series GPUs and AMD EPYC CPUs.
AMD also announced the launch of its EPYC 4005 Series processors, offering enterprise-grade features and leading performance for growing businesses and hosted IT service providers.
AMD Sees Soaring Growth in Client and Gaming Segment
In the second quarter of 2025 Client and Gaming segment revenue was $3.6 billion, up 69% year-over-year. The Client segment’s revenues soared 67.5% year over year to $2.499 billion, accounting for 32.5% of total revenues. Sequentially, revenues increased 8.9% quarter over quarter. Growth can be attributed to strong Ryzen desktop CPU sales and increased enterprise adoption across major OEMs like Lenovo, HP, and Dell Technologies.
In the second quarter of 2025, AMD announced the Ryzen Threadripper 9000WX and Ryzen Threadripper PRO 9000X Series processors, delivering leadership workstation performance for the most demanding workloads.
The Gaming segment’s revenues increased 73.1% year over year to $1.122 billion, accounting for 14.6% of total revenues. Sequentially, revenues increased 73.4% quarter over quarter. Growth was fueled by strong demand for Radeon GPUs, higher semi-custom console revenue, and collaborations with Microsoft and Sony for next-generation gaming technologies.
AMD Suffers From Weak Embedded Revenue
The Embedded segment revenues were $824 million, down 4.3% year over year but flat sequentially. The segment accounted for 10.7% of total revenues.
The decline can be attributed to a gradual recovery in demand across various markets, including test and measurement, communications, and aerospace. Additionally, inventory levels among customers in certain areas, such as the industrial sector, remained elevated, which contributed to the slower recovery.
AMD’s Margins Contract Y/Y in Q2
Non-GAAP gross margin contracted 990 basis points (bps) on a year-over-year basis to 43.3%. The decline was primarily due to an $800 million inventory write-down related to U.S. export controls restricting MI308 sales to China.
Non-GAAP operating expenses increased 32.2% year over year to $2.429 billion.
Non-GAAP operating margin was 11.7% in the second quarter, a decline from 21.7% in the year-ago quarter.
AMD’s Balance Sheet & Cash Flow
As of June 28, 2025, AMD had cash, cash equivalents and short-term investments of $5.867 billion compared with $7.310 billion as of March 29, 2025.
As of June 28, 2025, total debt was $3.21 billion compared with $4.16 billion as of March 29, 2025.
Operating cash flow was $1.462 billion compared with $939 billion in the first quarter of 2025.
Free cash flow was $1.180 billion in the second quarter of 2025 compared with $727 million in the first quarter of 2025. In the second quarter, free cash flow margin was 15%.
In the second quarter of 2025, AMD returned $478 million to shareholders through a share repurchase program. The company has $6 billion remaining under its current authorization.
AMD Initiates Q3 Guidance
AMD expects third-quarter 2025 revenues of $8.7 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 28% and sequential growth of approximately 13%.
For the third quarter, AMD expects non-GAAP gross margin to be roughly 54%. Non-GAAP operating expenses are expected to be nearly $2.55 billion.
Zacks Rank and Stocks to Consider
Currently, AMD carries a Zacks Rank #3 (Hold).
CommScope (COMM - Free Report) and OptimizeRx (OPRX - Free Report) are some better-ranked stocks that investors can consider in the broader Computer and Technology sector.
CommScope and OptimizeRx sport a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CommScope shares have gained 183.5% year to date. COMM is scheduled to release second-quarter 2025 results on Aug. 7.
OptimizeRx shares have gained 157.9% year to date. OPRX is scheduled to release second-quarter 2025 results on Aug. 7.