China GPU Ban Impacts AMD – Reports Q2 Operating Loss

This article does not constitute investment advice, and the author does not hold positions in any of the disclosed stocks.

AMD’s Mixed Earnings Report Signals Challenges Ahead

Advanced Micro Devices, Inc.(AMD) released its earnings report today, showcasing a blend of outcomes: despite its revenue surpassing expectations, the earnings per share (EPS) fell short. The semiconductor giant reported revenues of $7.6 billion and an EPS of $0.48. These figures contrast with analyst predictions that anticipated $7.4 billion in revenue and $0.49 in EPS. Notably, AMD’s guidance for the upcoming quarter, projected between $8.4 billion and $9 billion, did exceed the analyst consensus of $8.3 billion. However, this was not enough to prevent a decline of 4.2% in its share price during after-hours trading following the announcement.

Impact of Rising Costs: AMD Posts Operating Loss in Q2

The core of AMD’s earnings report revealed significant challenges within its income statement. The company’s cost of goods sold surged by an alarming 59% year-over-year. In contrast, revenue growth only reached 32%, resulting in a notable nine-point drop in gross margins. These inflated costs contributed to an operating loss of $134 million in the second quarter, a stark difference from the $259 million in operating income reported during the same period last year, and down from $806 million in the previous quarter.

Non-GAAP Figures and Strategic Moves

When adjusting for non-GAAP measures, AMD registered an operating profit of $897 million; however, this figure still represents a 29% decline year-over-year, and a staggering 50% drop compared to the previous quarter. AMD noted in its earnings release that these non-GAAP metrics are intended to facilitate consistent performance comparisons by excluding certain items deemed non-representative of core operations.

AMD financial statement showing income and expenses for three and six months ending June 2025. — AMD’s financial statements for Q2 2025 reveal an operational downturn.

Despite the reported operational loss based on Generally Accepted Accounting Principles (GAAP), AMD’s revenue hit a record high of $7.7 billion—up 32% year-over-year. Nonetheless, the non-GAAP gross margin decreased by ten points to 43%, largely attributed to an $800 million charge related to US export restrictions on the Instinct MI308 products. AMD clarified that excluding this charge would have resulted in a non-GAAP gross margin near 54%.

Looking Ahead: AMD’s Outlook and Market Response

The firm attributed its drop in operating income to these inventory and related charges arising from US export control measures; however, it did not clarify how its operating income would have been impacted without these restrictions. Earlier developments, such as the allowed sale of MI308 AI chips to China, indicate AMD is maneuvering within a complex geopolitical landscape, similar to its larger competitor NVIDIA.

For the upcoming quarter, AMD anticipates a revenue target of $8.7 billion and aims for a gross margin of 50%.Following the earnings report, the company’s stocks experienced additional declines, falling by 4.8% in after-hours trading before recovering slightly to a 3.8% decrease by 4:45 p.m. Eastern Time.

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