Date
August 8, 2025
Category
Wall Street More Bullish on AMD Stock Despite China Issues
When chip designer Advanced Micro Devices (AMD) posted its Q2 earnings1 on August 5, the stock experienced a pullback. Lower-than-expected earnings per share and concerns over China revenues were the main drivers of the share price weakness.
The company’s earnings weren’t terrible, however. And what’s interesting is that since the earnings report was published, multiple brokerage firms have increased their price targets for the chip stock.
Solid Q2 Earnings
For the second quarter of 2025, AMD’s revenue came in at a record $7.7 billion. This was at the top end of the company’s guidance, and it represented growth of 32% year on year.
Breaking this down, data center revenue was $3.2 billion, up 14% year on year, client and gaming revenue was $3.6 billion, up 69%, and embedded revenue was $824 million, down 4%.
In terms of profitability, performance here was mixed. While gross profit was up 7% year on year to $3.3 billion, net income was down 31% to $781 million and earnings per share was down 30% to $0.48 (slightly below the consensus forecast of $0.49).
This drop in profitability was largely the result of previously announced charges related to US government export controls of around $800 million. Excluding these charges, non-GAAP gross margin would have been approximately 54%, instead of 43%.
On the back of this phenomenal performance, Palantir raised both its Q3 and full-year guidance. For Q3, it now expects year-on-year growth of 50%. Meanwhile, for 2025, it now anticipates year-on-year growth of 45%. It also raised its guidance for adjusted income from operations (to between $1.912 and $1.920 billion) and adjusted free cash flow (to between $1.8 and $2.0 billion).
Guidance Increased
Turning to guidance, AMD said that for the third quarter of 2025, it expects revenue to be approximately $8.7 billion, plus or minus $300 million, compared to $8.3 billion expected by analysts. At the mid-point of the revenue range, this represents year-over-year growth of approximately 28%. For Q3, the company’s non-GAAP gross margin is expected to be approximately 54%. Note that this outlook does not include any revenue from Instinct MI308 shipments to China as the company’s license applications are currently under review by the US government.
China Revenues to Pick Up
Zooming in on China revenues, these could get a significant boost in the coming quarters as a result of the recent reversal of the US government’s ban on chips to China. This reversal should allow AMD to resume the sale of its Instinct MI308 GPUs in the country. There is some uncertainty in relation to timing, however. And some analysts have raised concerns over how soon shipments of the Instinct MI308 will restart and revenues will pick up.
Price Targets Increases
Overall, however, analyst sentiment appears to have become significantly more bullish after the company’s Q2 earnings with several brokerage firms increasing their price targets for the stock. Firms that have increased their targets2 include:
- Piper Sandler: $190 from $140
- TD Cowen: $195 from $165
- Benchmark: $210 from $170
- Raymond James: $200 from $120
- Evercore ISI: $188 from $144
- Stifel Nicolaus: $190 from $161
It’s worth noting that several of these price targets are well above the current share price. So, AMD could be an AI stock to watch in the second half 2025.
Footnotes:
1 AMD Investor Relations Press Release, AMD Reports Second Quarter 2025 Financial Results, as of August 5, 2025
2MarketBeat, Advanced Micro Devices (AMD) Stock Forecast & Price Target, as of August 6, 2025
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