AMD Misses Profit Targets Despite Beating Revenue Expectations

Advanced Micro Devices (AMD) released its second-quarter financial results on Tuesday, showing stronger-than-expected revenue but falling short on profit forecasts. The stock dipped over 5% in after-hours trading.

The semiconductor giant reported adjusted earnings of 48 cents per share, just shy of the 49 cents anticipated by analysts. However, revenue reached $7.69 billion, outpacing the expected $7.42 billion.

Looking ahead, AMD projected revenue of $8.7 billion for the third quarter, give or take $300 million, surpassing the $8.3 billion Wall Street forecast.

AMD’s net income surged to $872 million, or 54 cents per share, from $265 million (16 cents per share) a year ago. Still, the company’s performance lagged behind Nvidia, which continues to dominate the GPU market and saw a 32% revenue increase during the same period.

Although AMD remains second to Nvidia in the AI GPU race, major players like Meta and OpenAI are turning to AMD for alternative solutions, particularly for inference—the process of deploying AI models to users. During the quarter, AMD unveiled its next-generation Instinct MI400 series, expected in 2026. OpenAI CEO Sam Altman has pledged to utilize AMD’s newest GPUs.

The company is also contending with U.S. export restrictions that have severely impacted its sales of the MI308 AI chip to China. AMD says these controls cost the company $800 million in Q2. While shipments may resume pending government waivers, AMD’s current guidance excludes any potential revenue from the MI308, which is under review by the Department of Commerce.

“AI revenue declined year over year as U.S. export restrictions effectively eliminated MI308 sales to China, and we began transitioning to our next generation,” said AMD CEO Lisa Su during a call with analysts.

Su noted that the upcoming MI350 chip will be competitive with Nvidia’s high-end GB200 for both training and inference. She also highlighted that seven of the top 10 AI developers are already using AMD’s Instinct GPUs.

The company’s adjusted gross margin came in at 43%, though AMD said it would have hit 54% were it not for the export-related costs.

Beyond AI, AMD’s bread-and-butter business remains its central processing units (CPUs), which compete with Intel in powering traditional servers. Revenue from the data center division—which includes both CPUs and GPUs—rose 14% year-over-year to $3.2 billion. Su said strong cloud infrastructure spending is driving CPU demand, alongside GPUs.

AMD also saw major gains in its Client and Gaming segment, which includes chips for PCs and game consoles. That division grew 69% year-over-year to $3.6 billion. Desktop CPU sales contributed to a 57% jump in Client revenue to $2.5 billion, closely aligning with analyst forecasts. Gaming revenue soared 73% to $1.1 billion, well above expectations, boosted by strong demand for custom console chips and gaming GPUs.

Despite profit pressures, Su expressed confidence in AMD’s AI roadmap and overall product demand, signaling a robust outlook for the remainder of the year.

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