Lynx Equity Analyzes AMD Q1 2025 Earnings: Anticipating Downside Surprises in Guidance and 2H Commentary, Similar to Intel

This article is for informational purposes only and should not be considered as investment advice. The author holds no positions in any of the stocks discussed.

AMD Faces Market Turbulence Ahead of Q1 2025 Earnings

As uncertainty continues to reverberate through the semiconductor sector due to new tariffs imposed by President Trump, Advanced Micro Devices (AMD) is set to release its earnings report for the first quarter of 2025 on Tuesday. However, not all analysts are optimistic, with one notable Wall Street player expressing significant skepticism regarding AMD’s short-term outlook.

Impact of New Export Licensing Requirements

In April, AMD revealed that following a detailed assessment of the newly introduced U. S.export licensing requirements concerning its MI308 GPUs destined for China, the company anticipates incurring approximately $800 million in losses. These charges are related to inventory write-offs, purchase commitments, and various reserves.

Specifically, AMD indicated that these export restrictions apply to “China (including Hong Kong and Macau) and D:5 countries”or businesses with parent firms located in such regions.

This situation is particularly alarming considering that AMD reported a net income of $1.6 billion for the fiscal year 2024; thus, the anticipated $800 million charges equate to a staggering 50% of its total net earnings for that fiscal year.

Bearish Sentiment from Lynx Equity

This context brings us to Lynx Equity, which has recently issued a bearish note on AMD before its quarterly earnings announcement. The firm’s analysts argue that the stock’s potential for downside movement is currently underestimated.

“Just as with INTC [Intel], we expect AMD’s guidance and 2H commentary to surprise to the downside, this despite investor sentiment already in the dumps.”

In their analysis, Lynx Equity contends that while many market observers attribute Intel’s declining performance primarily to its loss of market share to AMD, the reality is that Intel’s struggles are also significantly impacted by uncertainties stemming from tariff-related supply chain disruptions—issues that also place AMD at risk.

Furthermore, Lynx Equity notes that the anticipated reductions in AMD’s revenue and gross margin due to the licensing requirements are already factored into market expectations, but the full extent of their impact is still uncertain.

“Three months ago, we were hoping for DeepSeek-related demand to help turn around AMD’s AI business. However, the licensing requirement imposed last month quashes that hope. Three months ago, we could see a path to $130. We don’t anymore. We see further downside in the stock from current levels.”

Revised Revenue Expectations and Stock Valuation

As a result of these developments, Lynx Equity projects AMD’s revenue for fiscal year 2025 to reach only $29.1 billion, significantly below the consensus expectation of $31 billion. This outlook signifies a modest year-over-year growth of just 13%.

Applying a multiple of 25 times to their estimated earnings per share (EPS) of $3.6, as opposed to the consensus estimate of $4.4, Lynx Equity predicts that AMD shares may only reach $90 in the current market environment.

Liquidity Position as a Silver Lining

Despite these concerns, the firm acknowledges AMD’s improved liquidity position, enhanced by approximately $5 billion derived from around $1.5 billion in new debt issued shortly before the tariff impacts and an estimated $3.5 billion expected from the divestiture of its acquisition of ZT Systems and its server assembly unit.

“We think this provides a cushion to the stock at just the right time as tariff wars drain liquidity from the global supply chain.”

As of the current reporting, AMD shares have declined slightly over 1%, contributing to a more than 16% decrease in value since the beginning of the year.

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