AI Investment Opportunity: Top Growth Stock in Artificial Intelligence Worth Purchasing Prior to Aug. 5
In a remarkable turn of events, AMD's second-quarter 2025 earnings are expected to deliver a strong performance, driven by record revenue and significant growth in both its PC processor market share and data center business.
The tech giant posted a record $7.7 billion in second-quarter revenue, up 32% year-over-year. AMD's data center revenue increased 14% year-over-year to $3.2 billion, accounting for over 42% of total revenues.
The strong data center business expansion was fueled by higher EPYC CPU sales and strong Instinct GPU shipments, despite a sequential decline in data center revenue. AMD also expanded its AI and enterprise collaborations, such as with Red Hat for AI inference on Instinct GPUs and with Dell Technologies for servers optimized using AMD EPYC CPUs and Instinct GPUs.
The overall revenue strength is somewhat offset by an $800 million inventory write-down due to U.S. export controls on AMD Instinct MI308 GPUs, but this does not obscure the underlying demand trends.
In the PC market, AMD's share of the laptop CPU space has improved, with a 3.2 percentage point increase year over year to 22.5%. The increase in PC shipments was driven by factors such as the end of support for Windows 10 PCs, strong demand from commercial customers, and an increase in AI PC shipments. In desktop PCs, AMD's share increased by 4 percentage points year over year in Q1 to 28%.
Major cloud computing players are set to deploy AMD's new AI accelerators for AI workloads, which could help it close the technology gap with archrival Nvidia. AMD expects a slight increase in its non-GAAP gross margin in Q2 on a year-over-year basis.
The relaxation of restrictions by the U.S. could help AMD beat consensus expectations in its upcoming Q2 results. AMD will be able to ship its AI accelerators into the Chinese market, which could further boost its earnings.
AMD's CEO, Lisa Su, stated that the company remains confident it can grow client processor revenue well ahead of the market in 2025. AMD believes it can earn more market share in client CPUs thanks to its broad portfolio of AI-focused processors.
The global PC shipments rose 8.4% in the second quarter of 2025, according to Counterpoint Research, indicating a significant year-over-year increase, marking the biggest year-over-year increase in PC shipments since 2022.
AMD's stock, which has already rallied 78% in the past three months, could soar higher following its upcoming quarterly report, as a PEG ratio of less than 1 indicates that AMD's stock is undervalued. Based on its projected five-year annual earnings growth rate, AMD's stock currently has a PEG ratio of 0.77, suggesting it could rise further.
In conclusion, AMD's strong Q2 2025 performance largely stems from its increased PC market share via Ryzen processors and robust adoption of EPYC CPUs and Instinct GPUs in the data center segment, positioning it well for growth in AI and cloud-related computing markets.
Investing in AMD's stock could prove beneficial due to its projected five-year annual earnings growth rate, as indicated by a PEG ratio of 0.77, suggesting undervaluation. The technology giant is poised for growth in AI and cloud-related computing markets, given its strong performance in PC market share and the robust adoption of its EPYC CPUs and Instinct GPUs in data centers. Additionally, AMD's strategy of expanding AI and enterprise collaborations, such as with Red Hat and Dell Technologies, will likely drive further finance gains in the future.
