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AMD Delivers Record Q2 Revenue Despite Export Headwinds, Signals Strong AI and Server Momentum Ahead

August 6, 2025 By Analysis.org

Advanced Micro Devices, Inc. (NASDAQ: AMD) has once again demonstrated its resilience and strategic depth, reporting record revenue of $7.7 billion in the second quarter of 2025, up 32% year-over-year. While the headline GAAP results include an operating loss of $134 million—largely due to an $800 million inventory write-down tied to U.S. export restrictions on its MI308 data center GPUs—investors should note that AMD’s core business remains fundamentally strong. Excluding these charges, non-GAAP gross margin would have reached a robust 54%, suggesting that profitability remains intact beneath the surface of these one-off events. The company’s stock rose in after-hours trading as the results and forward guidance reassured the market.

The standout drivers were AMD’s record-setting performance in the Client and Gaming segments, which together brought in $3.6 billion, up 69% from a year ago. The Client segment alone reached $2.5 billion, fueled by booming demand for the latest Ryzen CPUs based on the Zen 5 architecture. Gaming also saw a healthy lift thanks to semi-custom revenue and Radeon GPU demand. The Data Center segment grew 14% to $3.2 billion despite the MI308 constraints, with strong EPYC server processor sales picking up the slack. The Embedded segment, which declined 4%, remained the only drag, reflecting mixed macroeconomic conditions in certain industrial and IoT markets.

On a non-GAAP basis, AMD reported operating income of $897 million and net income of $781 million, translating into earnings per share (EPS) of $0.48. While this represented a sequential decline, it was in line with expectations and reflects a normalization following an exceptionally strong Q1. Importantly, AMD generated record free cash flow this quarter, supporting the company’s balance sheet strength and future investment capability.

The company’s forward-looking statements were particularly bullish. For Q3 2025, AMD projects revenue of approximately $8.7 billion, up 28% year-over-year, with a projected non-GAAP gross margin of 54%. Notably, this guidance excludes potential revenue from the MI308 in China, where license applications are still under U.S. government review. Should approval come through later in the year, AMD could see additional upside in Q4.

The long-term story remains centered around AI, where AMD is rapidly expanding its presence. The company’s “Advancing AI 2025” event unveiled the MI350 GPU family, the upcoming Helios platform featuring the MI400 GPUs and EPYC “Venice” CPUs, and the ROCm 7 open-source AI software stack. These developments significantly close the gap with Nvidia, whose dominance in the AI acceleration space has come under increasing scrutiny. AMD’s broad alliances—with Meta, OpenAI, xAI, Microsoft, Oracle, Red Hat, Dell, and others—also signal that hyperscalers and cloud infrastructure providers are embracing AMD as a credible alternative.

Furthermore, the $3 billion divestiture of ZT Systems’ manufacturing business to Sanmina positions AMD to offload low-margin operations while aligning itself with a strategic manufacturing partner for AI and cloud-scale hardware. This move is not only margin-accretive over time, but it also strengthens AMD’s capacity to respond rapidly to large-scale infrastructure demand without overextending its internal resources.

From an investor standpoint, AMD is executing on all major fronts—client, gaming, data center, and AI—while demonstrating financial discipline and product innovation. Despite regulatory headwinds, the company is navigating global uncertainties with operational clarity and strategic foresight.

Stock Outlook: BUY

AMD continues to be a compelling long-term buy. At current valuation levels, the stock still offers significant upside potential, particularly as the MI350 and future MI400 GPU ramps play out in 2025 and beyond. The company’s leadership in CPUs, credible roadmap in AI, and expanding customer base suggest AMD is not just catching up—it is laying the groundwork to lead. Investors should expect volatility tied to export policy decisions, but the underlying growth narrative remains strong and intact. For growth-oriented portfolios, AMD represents a strategic exposure to the ongoing AI infrastructure buildout and high-performance computing megatrend.

Filed Under: Briefing

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