AMD Eyes New Highs as Q2 Earnings Await
So, there's been a lot of buzz around AMD lately—and for good reason. As the company gears up to release its Q2 earnings report, all eyes are on what could be another record-setting moment for the chipmaker. Investors and analysts alike are watching closely, especially since AMD’s stock has been on fire—surging over 70% in the past three months alone. In fact, it recently hit a 52-week high at $182 a share. Now, the big question is: can AMD keep that momentum going?
What’s driving all this optimism? Well, a lot of it comes down to AI and data center growth. AMD’s latest GPU, the MI355X, has reportedly delivered over seven times the computing power of its previous top-tier chip. That’s a massive leap, and it puts AMD in a serious position to compete with Nvidia, especially in the AI accelerator market. Demand has been so strong that AMD’s pricing for its MI350 series has jumped to over $20,000 per unit. That’s a strong sign heading into earnings.
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Another major tailwind is the loosening of U.S. export restrictions, which now allow AMD to resume shipments of chips to China. This move could potentially bring in hundreds of millions in new revenue, and investors are definitely paying attention to that.
Now, looking back at Q1, AMD saw a 57% year-over-year increase in data center revenue, and expectations are high for another strong quarter. Analysts project Q2 sales to hit around $7.41 billion—up 27% from last year. However, earnings per share are expected to come in at $0.47, down from $0.69 in the previous period. That dip is mainly being attributed to margin pressures and heavy investment in R&D for next-gen GPUs, which isn’t necessarily a bad thing long-term.
Despite those short-term concerns, AMD has a solid track record. It’s met or beaten earnings expectations for 25 straight quarters, going all the way back to 2019. On average, it's delivered an EPS surprise of 2.3% over the last four quarters. So, there’s definitely a history of under-promising and over-delivering.
Valuation-wise, AMD is trading at about 44 times forward earnings—more expensive than the S&P 500, but in line with peers like Broadcom and Nvidia. And when looking at price-to-sales, AMD actually appears more reasonably valued compared to other AI-focused chipmakers.
All things considered, AMD currently holds a “Hold” rating from Zacks. But given its strong fundamentals, booming AI demand, and a promising product pipeline, it wouldn’t be surprising to see the stock test new highs—especially if this quarter’s results and forward guidance impress. Investors will definitely want to stay tuned.
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