AMD stock slips after Q2 profit miss, but AI-driven $8.7 billion Q3 forecast sparks investor hope
The highlight? AMD's forecast for the upcoming quarter. With demand for AI chips growing rapidly, the company expects a sharp boost in sales. It's also rolling out new AI hardware that could shake up the competition. But at the same time, trade restrictions and export delays still hover over its roadmap, especially in China.
AMD revenue beats estimates despite earnings slip
For Q2 2025, AMD posted adjusted earnings of 48 cents per share, just under the expected 49 cents. Revenue, though, stood tall at $7.7 billion, beating the $7.4 billion forecast. Year-over-year, that's a 32% rise, driven by solid growth in personal computing and gaming.
🚨 $AMD Q2 Earnings 🚨• Sales $7.7B vs Est. $7.4B• EPS $0.48 vs. Est. $0.48• Data Center Sales $3.2B -- up 14% YoY• Gross Margin 43% vs. Est. 54%Q3 Outlook• Sales $8.7B vs Est. $8.3BAMD says U.S. export controls led to $800M in inventory charges -- gross margin… pic.twitter.com/GCIyQN9H89
The company's net income reached $872 million, up from $265 million in the same quarter last year. However, profit was impacted by the lingering effect of U.S. export restrictions, especially around its MI308 AI chips.
AMD AI forecast shines a light on Q3
AMD expects to bring in around $8.7 billion in revenue for Q3, give or take $300 million. That's more than what analysts predicted, and it suggests confidence in its next-gen AI chips. CEO Lisa Su pointed to the rollout of the Instinct MI350 series, which AMD claims can rival Nvidia's Blackwell chips in both training and inference.
'Seven of the top ten AI companies are now using Instinct,' Su told analysts during the earnings call. That's a big step up for AMD, especially as firms like Meta and OpenAI look for alternatives to Nvidia's more expensive chips.
China export ban: A costly delay for AMD
One of the biggest challenges AMD faced this year was the temporary U.S. ban on exporting its MI308 AI chips to China. That move cost the company roughly $800 million in lost revenue and led to an operating loss of $155 million last quarter. Although the Trump administration has now relaxed those restrictions, AMD is still waiting for final clearance to resume shipments.
AMD has now delivered two consecutive quarters of declining Data Center Revenue.The stock is down 4.7% after hours.$AMD pic.twitter.com/JyIoWrB0Dk
For now, AMD's Q3 forecast does not include revenue from China-bound AI chips. But once sales restart, it could help AMD recover a big chunk of what it lost earlier this year.
Gaming and client segments push ahead
While AI grabs headlines, AMD's traditional businesses are also pulling their weight. The gaming segment brought in $1.1 billion in revenue, a 73% increase year-over-year, driven by demand for custom console chips and GPUs. The client's business, which includes desktop and laptop CPUs, pulled in $2.5 billion, up 57% from last year.
The data centre segment delivered $3.2 billion, a 14% rise, though just shy of analyst forecasts. AMD's Ryzen Zen 5 processors helped boost momentum in the PC space, where the company continues to eat into Intel's market share.
AMD is rivalling Nvidia in the AI segment
Despite the upbeat forecast, AMD still trails Nvidia by a large margin in the AI chip race. Nvidia remains the go-to for training large models, thanks to its dominant GPUs and widespread developer support. But AMD is slowly building its case, especially in inference, where price and efficiency matter more.
$AMD -- THE INFERENCE ENGINE OF AI -- REPORTS 32% YoY GROWTH 🤯 pic.twitter.com/W75T5ioYa5
The MI350 series is AMD's answer to Nvidia's GB200 platform. Su says the new chips offer four times the performance and 35 times better inferencing compared to their previous models. If real-world adoption follows, AMD could start closing the gap sooner than expected.
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