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Advanced Micro Devices Rises 18% in a Month: Buy or Hold the Stock?
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Key Takeaways
AMD shares have surged 17.8% in a month, outpacing the sector and NVIDIA's gains.
Q3 revenue forecast is $8.7B, up 28% year over year at the midpoint.
MI350 GPUs, EPYC chips, and big-name partners boost AI footprint.
Advanced Micro Devices (AMD - Free Report) shares have jumped 17.8% in the past month, outperforming the Zacks Computer and Technology sector and its closest peer, NVIDIA (NVDA - Free Report) . The broader sector has appreciated 5.1% while NVIDIA has jumped 11%.
However, shares have dropped 1.1% since the company reported second-quarter 2025 results on Aug. 5. AMD’s second-quarter 2025 results suffered from the U.S. export controls on MI308 sales to China, leading to an $800 million inventory write-down. Data Center AI revenues fell year over year due to the restrictions. AMD’s third-quarter 2025 guidance didn’t include any revenues from MI308.
The MI308 export controls negatively impacted AMD’s second-quarter 2025 gross margin, which was 43% down from 53% in the year-ago quarter. Operating margin of 12% declined from 22% in the year-ago quarter due to the inventory and related charges.
AMD Stock’s One-Month Performance
Image Source: Zacks Investment Research
AMD Offers Positive Q3 Guidance
Nevertheless, AMD now expects revenues to be roughly $8.7 billion (+/- $300 million), indicating 28% year-over-year revenue growth at the mid-point, driven by strong double-digit growth in Client and Gaming, and Data Center segments.
Sequentially, revenues are expected to grow approximately 13%, driven by strong double-digit growth in the Data Center segment with the ramp of AMD Instinct MI350 series GPU products. AMD expects modest growth in the Client and Gaming segments, with Client revenues increasing and flat Gaming revenues. AMD expects the Embedded segment’s revenues to return to growth in the current quarter.
AMD expects third-quarter non-GAAP gross margin to be approximately 54%. The company expects non-GAAP operating expenses to be approximately $2.55 billion.
The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $8.72 billion, indicating 27.9% from the figure reported in the year-ago quarter. The consensus mark for third-quarter 2025 earnings is pegged $1.16 per share, up 5.5% over the past 30 days, suggesting 26.1% from the figure reported in the year-ago quarter.
AMD Expands AI Reach with New MI350 GPUs, EPYC Portfolio
AMD’s EPYC continues to benefit from strong demand from hyperscalers. More than 100 new AMD-powered cloud instances launched in the second quarter, including multiple Turin instances from Google and Oracle (ORCL - Free Report) that deliver up to twice the performance of its previous generation. HPE, Dell Technologies, Lenovo and Super Micro launched 28 new Turin platforms in the reported quarter.
AMD is strengthening its footprint in the AI market through an expanding portfolio. AMD recently introduced its comprehensive, end-to-end AI platform at the 2025 Advancing AI event, introducing the powerful Instinct MI350 Series GPUs with 4x generational AI compute gains. Oracle is building a 27,000-plus node AI cluster combining MI355X accelerators, fifth-gen EPYC Turin CPUs and Pollara 400 SmartNICs. AMD remains on track in the development of the next-generation MI400 series and is expected to launch in 2026.
The company has showcased its open, rack-scale AI infrastructure and ROCm 7 software stack, enabling scalable, energy-efficient AI deployment. Strategic partners, including Meta Platforms (META - Free Report) , OpenAI, Microsoft and Oracle, highlighted AMD’s growing role in powering next-generation AI workloads.
Meta Platforms announced the broad deployment of AMD Instinct MI300X for Llama 3 and Llama 4 inference. Meta Platforms also expressed a strong interest in the MI350 Series and is collaborating with AMD on future AI roadmaps, including the MI400 platform.
AMD Faces Stiff Competition From NVIDIA
Despite an expanding portfolio and a rich partner base, AMD is facing stiff competition from NVIDIA.
NVIDIA is benefiting from the strong growth of AI and high-performance, accelerated computing. The growing demand for generative AI and large language models, which utilize GPUs based on NVIDIA’s Hopper and Blackwell architectures, is driving its data center revenues. In first-quarter fiscal 2026, NVDA’s Data Center revenues jumped 73.3% year over year and 9.9% sequentially to $39.1 billion.
AMD Stock Overvalued
AMD stock is currently overvalued, as the Value Score of F suggests a stretched valuation at this moment.
The stock is trading at a premium, with a forward 12-month Price/Sales of 7.71X compared with the industry’s 3.72X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Conclusion
AMD’s expanding portfolio and rich partner base are expected to improve its top-line growth.
However, its near-term prospects are dull due to macroeconomic uncertainties and stiff competition, particularly from NVIDIA in the cloud data center and AI chip markets. Stretched valuation also remains a concern.
Image: Bigstock
Advanced Micro Devices Rises 18% in a Month: Buy or Hold the Stock?
Key Takeaways
Advanced Micro Devices (AMD - Free Report) shares have jumped 17.8% in the past month, outperforming the Zacks Computer and Technology sector and its closest peer, NVIDIA (NVDA - Free Report) . The broader sector has appreciated 5.1% while NVIDIA has jumped 11%.
However, shares have dropped 1.1% since the company reported second-quarter 2025 results on Aug. 5. AMD’s second-quarter 2025 results suffered from the U.S. export controls on MI308 sales to China, leading to an $800 million inventory write-down. Data Center AI revenues fell year over year due to the restrictions. AMD’s third-quarter 2025 guidance didn’t include any revenues from MI308.
The MI308 export controls negatively impacted AMD’s second-quarter 2025 gross margin, which was 43% down from 53% in the year-ago quarter. Operating margin of 12% declined from 22% in the year-ago quarter due to the inventory and related charges.
AMD Stock’s One-Month Performance
Image Source: Zacks Investment Research
AMD Offers Positive Q3 Guidance
Nevertheless, AMD now expects revenues to be roughly $8.7 billion (+/- $300 million), indicating 28% year-over-year revenue growth at the mid-point, driven by strong double-digit growth in Client and Gaming, and Data Center segments.
Sequentially, revenues are expected to grow approximately 13%, driven by strong double-digit growth in the Data Center segment with the ramp of AMD Instinct MI350 series GPU products. AMD expects modest growth in the Client and Gaming segments, with Client revenues increasing and flat Gaming revenues. AMD expects the Embedded segment’s revenues to return to growth in the current quarter.
AMD expects third-quarter non-GAAP gross margin to be approximately 54%. The company expects non-GAAP operating expenses to be approximately $2.55 billion.
The Zacks Consensus Estimate for third-quarter 2025 revenues is pegged at $8.72 billion, indicating 27.9% from the figure reported in the year-ago quarter. The consensus mark for third-quarter 2025 earnings is pegged $1.16 per share, up 5.5% over the past 30 days, suggesting 26.1% from the figure reported in the year-ago quarter.
Advanced Micro Devices, Inc. Price and Consensus
Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote
AMD Expands AI Reach with New MI350 GPUs, EPYC Portfolio
AMD’s EPYC continues to benefit from strong demand from hyperscalers. More than 100 new AMD-powered cloud instances launched in the second quarter, including multiple Turin instances from Google and Oracle (ORCL - Free Report) that deliver up to twice the performance of its previous generation. HPE, Dell Technologies, Lenovo and Super Micro launched 28 new Turin platforms in the reported quarter.
AMD is strengthening its footprint in the AI market through an expanding portfolio. AMD recently introduced its comprehensive, end-to-end AI platform at the 2025 Advancing AI event, introducing the powerful Instinct MI350 Series GPUs with 4x generational AI compute gains. Oracle is building a 27,000-plus node AI cluster combining MI355X accelerators, fifth-gen EPYC Turin CPUs and Pollara 400 SmartNICs. AMD remains on track in the development of the next-generation MI400 series and is expected to launch in 2026.
The company has showcased its open, rack-scale AI infrastructure and ROCm 7 software stack, enabling scalable, energy-efficient AI deployment. Strategic partners, including Meta Platforms (META - Free Report) , OpenAI, Microsoft and Oracle, highlighted AMD’s growing role in powering next-generation AI workloads.
Meta Platforms announced the broad deployment of AMD Instinct MI300X for Llama 3 and Llama 4 inference. Meta Platforms also expressed a strong interest in the MI350 Series and is collaborating with AMD on future AI roadmaps, including the MI400 platform.
AMD Faces Stiff Competition From NVIDIA
Despite an expanding portfolio and a rich partner base, AMD is facing stiff competition from NVIDIA.
NVIDIA is benefiting from the strong growth of AI and high-performance, accelerated computing. The growing demand for generative AI and large language models, which utilize GPUs based on NVIDIA’s Hopper and Blackwell architectures, is driving its data center revenues. In first-quarter fiscal 2026, NVDA’s Data Center revenues jumped 73.3% year over year and 9.9% sequentially to $39.1 billion.
AMD Stock Overvalued
AMD stock is currently overvalued, as the Value Score of F suggests a stretched valuation at this moment.
The stock is trading at a premium, with a forward 12-month Price/Sales of 7.71X compared with the industry’s 3.72X.
Price/Sales (F12M)
Image Source: Zacks Investment Research
Conclusion
AMD’s expanding portfolio and rich partner base are expected to improve its top-line growth.
However, its near-term prospects are dull due to macroeconomic uncertainties and stiff competition, particularly from NVIDIA in the cloud data center and AI chip markets. Stretched valuation also remains a concern.
AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.