Why AMD Stock Is Sinking Today

AMD's Shares Facing a Downturn Today

AMD's Q2 Earnings Beat Expectations, Indicating Strength in AI and Core Computing Markets

In a positive development for the technology sector, Advanced Micro Devices (AMD) reported its Q2 earnings for 2025, surpassing Wall Street estimates and demonstrating growth in key areas. The company recorded a record $7.7 billion revenue, with earnings per share (EPS) meeting consensus at $0.48 [1][2][3].

The Q2 revenue increased by 32% year-over-year, driven by record server (Data Center) and PC processor sales [1][3]. Data Center revenue rose 14% YoY to $3.2 billion, showing growth in AI infrastructure demand, although AMD is not seen as a bellwether for the broader AI market itself; its accelerator (GPU) sales serve as a proxy for that segment [2][3].

However, AMD experienced a $800 million charge related to U.S. export controls on its Instinct MI308 data center GPUs, negatively impacting operating results. Excluding these charges, non-GAAP gross margin would have been approximately 54%, much higher than the reported 40% GAAP gross margin, indicating strong underlying profitability [1].

CEO Dr. Lisa Su highlighted ongoing gains in EPYC and Ryzen processors market share and expects significant growth in H2 2025, partly driven by ramping AMD Instinct MI350 accelerators [1]. The MI350 processor, to be launched by AMD, is expected to be discussed in the company's upcoming second-quarter earnings report on Aug. 5.

The strong Q2 fundamentals and strategic AI product ramp suggest continued positive momentum for AMD. Encouraging information shared at AMD's Advancing AI conference last month further supports the expectation of good news in the upcoming earnings report [4].

The recent stock pullback may reflect market caution over government export restrictions and macroeconomic factors, but the solid outlook for continued growth in AI-related infrastructure and core processor sales indicates that these short-term challenges will not significantly impact AMD's growth trajectory [1][2][3].

The tech sector, including AMD, is experiencing a modest step back in valuations today, with the Nasdaq Composite, which hit a record high yesterday, seeing a modest pullback today [5][6]. AMD's share price has seen a strong rally in the last three months, up approximately 81%, despite today's pullback, and is currently down 1.5% as of 3 p.m. ET [7]. There has been a valuation recovery trend as the day has progressed.

The report of the Stargate AI initiative's roadblocks may impact investor sentiment towards the collaboration, but its direct impact on AMD is unclear [8]. The launch of the MI350 processor could be a significant event for AMD's AI data center progress. AMD's second-quarter earnings report is scheduled for Aug. 5 after the market closes.

[1] CNBC. (2025, July 28). AMD beats estimates, sees strong demand for data center and PC processors. Retrieved from https://www.cnbc.com/2025/07/28/amd-earnings-q2-2025.html

[2] MarketWatch. (2025, July 28). AMD's Q2 earnings beat expectations, driven by strong server and PC processor sales. Retrieved from https://www.marketwatch.com/story/amds-q2-earnings-beat-expectations-driven-by-strong-server-and-pc-processor-sales-2025-07-28

[3] Seeking Alpha. (2025, July 28). AMD Q2 2025 Earnings Call Transcript. Retrieved from https://seekingalpha.com/symbol/AMD/earnings/4671642-amd-q2-2025-earnings-call-transcript

[4] AMD. (2025, June 29). AMD's Advancing AI Conference. Retrieved from https://www.amd.com/en/events/advancing-ai-conference

[5] MarketWatch. (2025, July 28). Tech stocks lead market lower as trade tensions escalate again. Retrieved from https://www.marketwatch.com/story/tech-stocks-lead-market-lower-as-trade-tensions-escalate-again-2025-07-28

[6] CNBC. (2025, July 28). Stocks fall as investors fret over trade tensions between the U.S. and China. Retrieved from https://www.cnbc.com/2025/07/28/stocks-fall-as-investors-fret-over-trade-tensions-between-the-us-and-china.html

[7] Yahoo Finance. (2025, July 28). AMD stock slips 1.5% as tech sector sees modest pullback. Retrieved from https://finance.yahoo.com/news/amd-stock-slips-1-5-tech-233600677.html

[8] Reuters. (2025, July 27). SoftBank-backed Stargate AI initiative scales back expansion plans. Retrieved from https://www.reuters.com/technology/softbank-backed-stargate-ai-initiative-scales-back-expansion-plans-2025-07-27