AMD Reports Record Revenue in Q2’25, Margins Affected

by MarketNewsData

Stock Reaction: AMD shares traded lower by 3.82% in after-hours. Stock closed 163.12 −11.19 (6.42%) on Wed Aug 6.

Key Financials (GAAP)

  • Revenue: $7.69B (↑32% YoY, ↑3% QoQ)
  • Net Income: $872M (↑229% YoY)
  • EPS (GAAP): $0.54 (vs. $0.16 Q2’24)
  • Operating Loss: $(134)M due to $800M inventory charge from U.S. export restrictions on MI308 GPUs
  • Gross Margin: 40% (↓9pts YoY)
  • Free Cash Flow: $1.18B (record high)

Non-GAAP Results

  • EPS: $0.48 (vs. $0.69 Q2’24, $0.96 Q1’25)
  • Gross Margin: 43% (would have been 54% excluding the $800M charge)
  • Operating Income: $897M (↓29% YoY)
  • Net Income: $781M (↓31% YoY)

Segment Performance

  • Data Center: $3.2B, ↑14% YoY
    • Strong EPYC sales, but MI308 GPU sales to China restricted
  • Client & Gaming: $3.6B, ↑69% YoY
    • Record Client revenue ($2.5B), strong “Zen 5” Ryzen and Radeon GPU sales
    • Gaming revenue ↑73% YoY on semi-custom and GPU strength
  • Embedded: $824M, ↓4% YoY

Guidance (Q3 2025)

  • Revenue: ~$8.7B ± $300M (↑13% QoQ, ↑28% YoY midpoint)
  • Non-GAAP Gross Margin: ~54%
  • MI308 sales to China: Not included in guidance; export license still pending

AI & Strategic Developments

  • AI Momentum:
    • Launch of MI350 Series and “Helios” rack-scale platform
    • ROCm 7 open-source stack
    • Strategic collaborations with Meta, OpenAI, Microsoft, xAI, Red Hat, Dell
  • Infrastructure Growth:
    • HUMAIN to deploy 500MW AI compute with AMD
    • Nokia to use 5th Gen EPYC in its telecom platforms
  • ZT Systems Divestiture: $3B deal to sell data center manufacturing business to Sanmina

Observations & Implications

  • Positive: Client/Gaming outperformance shows AMD’s product strength is resonating with consumers. Free cash flow and strong revenue growth offer a solid foundation heading into H2.
  • Challenge: Export controls remain a headwind for high-margin data center GPU sales, muting full potential of AI tailwinds. Gross margin compression signals rising costs and inventory risks.
  • Outlook: Guidance implies continued momentum with MI350 ramp and Ryzen/EPYC share gains, keeping AMD in strong competitive positioning vs. peers like $NVDA and $INTC.

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