Advanced Micro Devices AMD is set to release its second-quarter 2025 results on Aug. 5.
AMD expects second-quarter 2025 revenues of $7.4 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 27%.
The Zacks Consensus Estimate for AMD’s second-quarter revenues is pegged at $7.41 billion, suggesting year-over-year growth of 26.96%. The consensus mark for second-quarter earnings is pegged at 47 cents per share, unchanged over the past 30 days. The earnings estimate indicates a decline of 31.88% on a year-over-year basis.
AMD beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average surprise being 2.30%.
Advanced Micro Devices, Inc. Price and EPS Surprise
Advanced Micro Devices, Inc. price-eps-surprise | Advanced Micro Devices, Inc. Quote
Let’s see how things have shaped up for the upcoming earnings announcement.
AMD’s Data Center & Client Segment Revenues to Grow Y/Y
AMD’s second-quarter performance is expected to have benefited from growth in both its data center and client segments, driven by continued demand for its EPYC processors and Ryzen chips. The data center segment, in particular, has been a major contributor to AMD’s success, and the company expects this trend to have continued in the to-be-reported quarter.
AMD expects the Data Center segment’s revenues to significantly increase, driven by the strong sales of its data center chips that support hyperscalers and power AI and Generative AI applications. The Zacks Consensus Estimate for second-quarter Data Center revenues is pegged at $3.31 billion, indicating an impressive year-over-year increase of 16.7%.
AMD expects a double-digit percentage increase in revenues for the client and gaming segment in the to-be-reported quarter. This growth is driven by strong desktop performance, continued demand for gaming products, and the beginning of the commercial ramp, particularly in the notebook and commercial PC markets.
The company is likely to see continued growth in its client business, driven by higher demand for Ryzen processors across desktop and mobile platforms. AMD’s collaborations, such as the one with Dell Technologies DELL for Ryzen Pro processors in commercial PCs, are expected to have bolstered growth in this segment in the to-be-reported quarter. The Zacks Consensus Estimate for the second-quarter Client segment revenues is pegged at $2.52 billion, indicating year-over-year growth of 69.3%.
Weak Embedded Segment to Hurt AMD’s Q2 Results
AMD’s near-term prospects suffer from weakness in the Embedded segment. On a year-over-year basis, this segment’s revenues are expected to remain flat in the to-be-reported quarter. The Zacks Consensus Estimate for second-quarter Embedded revenues is pegged at $818 million, indicating a 4.9% year-over-year decline.
AMD Outperforms Sector & Industry
Advanced Micro Devices shares have surged 45.9% in the year-to-date period, outperforming the Zacks Computer and Technology sector’s growth of 11.4% and the Zacks Computer–Integrated Systems industry’s rise of 31.4%.
The company’s shares have also outperformed its peer, Intel Corporation INTC, which is also expanding its footprint in the data center and client segments. Intel’s shares have lost 1.3% in the year-to-date period.
AMD Stock Performance
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The AMD stock is not so cheap, as its Value Score of F suggests a stretched valuation at this moment.
In terms of the forward 12-month price/sales, Advanced Micro Devices is currently trading at 8.16X, higher than the Computer–Integrated Systems industry’s 3.88X and Intel’s 1.64X.
AMD Valuation
Image Source: Zacks Investment Research
AMD Benefits From Rich Partner Base
AMD benefits from a rich partner base, which includes Nokia NOK, Microsoft, Oracle, Dell Technologies, Hewlett-Packard, Lenovo, Meta Platforms, and IBM, having Instinct platforms in production.
In June 2025, AMD announced that Nokia had adopted its fifth-gen EPYC 9005 Series processors for the Nokia Cloud Platform. These processors will enhance performance per watt for containerized workloads, important to 5G Core, edge, and enterprise applications. The integration supports telecom networks in meeting rising data demands while improving energy efficiency and reducing environmental impact.
The demand for AI accelerators like the Instinct MI300 series, especially from hyperscalers, is expected to continue growing, further boosting data center revenues in the second quarter of 2025. In the Data Center AI business, MI300X deployment increased with cloud partners, including Meta Platforms, Microsoft, IBM, Digital Ocean, and Dell Technologies, among others.
Conclusion
AMD’s expanding portfolio and strategic acquisitions are expected to have improved its top-line growth in the to-be-reported quarter amid weakness in the Embedded segment, and fierce competition from NVIDIA.
The most significant headwind is the new export controls on MI308 shipments to China, which are expected to reduce revenues by $700 million in the second quarter of 2025. Stretched valuation is another concern.
AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).