AMD Stock Declines in Aftermarket Trading Despite Exceeding Q1 2025 Analyst Expectations

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AMD Exceeds Earnings Expectations in Q1 2025

Advanced Micro Devices (AMD) has released its earnings for the first quarter of 2025, surpassing analyst forecasts. Analysts projected earnings of 94 cents per share and $7.13 billion in revenue. However, AMD outperformed these estimates with earnings per share (EPS) of 96 cents and total revenue reaching $7.44 billion. Looking ahead, analysts anticipated guidance for 86 cents EPS and revenue of $7.25 billion. In a positive turn, AMD’s guidance topped expectations, setting revenue projections at $7.4 billion. Notably, AMD indicated an impact of trade tensions, estimating an $800 million cost due to restrictions on AI chip exports.

Strong Revenue Growth from Key Segments

Following the earnings announcement, AMD’s stock experienced a notable increase, initially rising 5.5% before settling with a 3.8% gain. The company’s most crucial segment, data centers, generated $3.7 billion in sales – marking an impressive 57% growth year-over-year, driven by strong sales of data center CPUs and GPUs. AMD continues to benefit from Intel’s current challenges in the CPU market, allowing it to capture more market share from its larger competitor.

Additionally, the client computing segment also demonstrated robust performance, posting a 28% increase in revenue. This was largely attributed to the success of AMD’s Zen 5 processors. The firm reported $2.3 billion in CPU sales, which is significantly higher than the $1.4 billion logged in the same quarter last year. However, the gaming GPU segment saw a revenue decline, falling to $600 million—a $300 million decrease compared to the previous year’s figures.

Financial Highlights and Future Guidance

Overall, AMD recorded $7.4 billion in total revenue for the quarter, reflecting a solid 36% annual growth—setting a record for this period. The company’s newer Ryzen processors, positioned at higher price points, contributed to an improvement in gross margins, which now stand at 50% on a GAAP basis and 54% on a non-GAAP basis.

Operating income showed noteworthy increases, with GAAP figures amounting to $800 million and non-GAAP figures reaching $1.8 billion. AMD’s gross profit climbed by 46% year-over-year on a GAAP basis, totaling $3.7 billion. Furthermore, the collaboration with Oracle to implement data center accelerators and EPYC processors played a significant role in driving revenue growth for this segment.

For the upcoming quarter, AMD has guided expectations toward $7.4 billion in revenue, coupled with a forecasted gross margin of 43%.This follows an $800 million inventory charge attributed to U. S.restrictions on AI GPU exports. Excluding this charge, AMD estimates that its gross margin would align with the previous quarter’s level of 54%.However, following the earnings call, the company’s shares retracted their post-earnings gains.

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