AMD reported Q3 revenue guidance of about $13 billion, beating Wall Street's estimate of $12.52 billion, and Q2 results showed data-center sales more than doubled to a record $6.72 billion.
Despite the beat and CEO guidance that data-center revenue will more than double again in 2027, the stock fell nearly 9% after hours, suggesting investors had expected even larger upside given the sharp rise in shares ahead of the earnings report.
What happened
AMD forecast Q3 revenue of about $13 billion (plus or minus $300 million), exceeding Wall Street's estimate of roughly $12.52 billion. Q2 revenue rose 50% year-over-year to $11.54 billion, and data-center sales more than doubled to a record $6.72 billion. The stock fell nearly 9% after hours despite the beat.
Why it matters
AMD's data-center business, which relies heavily on AI chip demand, showed strength and topped analyst expectations. However, the stock's sharp decline after the earnings report signals that investors had built in even larger gains ahead of the announcement, suggesting the market had already priced in strong performance.
What to watch
CEO Lisa Su stated AMD expects data-center revenue to more than double again in 2027 as customers increase spending on AI infrastructure. The company also guided to an adjusted gross margin of around 56%, broadly in line with forecasts.
Advanced Micro Devices Inc. reported Q2 results and Q3 guidance that beat Wall Street expectations, yet the stock fell nearly 9% in after-hours trading, highlighting the tension between fundamental strength and market sentiment. For the third quarter, AMD forecast revenue of about $13 billion, plus or minus $300 million, surpassing Wall Street's estimate of roughly $12.52 billion. The company also guided to an adjusted gross margin of around 56%, broadly in line with forecasts.
Q2 performance underscored the strength of AMD's AI-driven business. Revenue rose 50% from a year earlier to $11.54 billion, beating expectations of $11.28 billion. Adjusted earnings per share reached $1.66, four cents above consensus. The standout performer was the data-center business, where sales more than doubled to a record $6.72 billion, also topping analyst expectations and demonstrating robust demand for AMD's AI chips.
Chief Executive Lisa Su emphasized the runway ahead, stating that AMD expects data-center revenue to more than double again in 2027 as customers spend more on artificial-intelligence infrastructure. This projection signals management's confidence in sustained AI investment cycles. Despite these fundamentals, the stock's sharp decline after hours suggested investors had wanted an even larger upside surprise, having already bid up AMD's shares substantially in anticipation of the report.
AMD's earnings result puts the company in a position many would envy: the semiconductor maker beat Wall Street's revenue estimate and reported record data-center sales driven by strong AI chip demand. The 50% year-over-year jump in Q2 revenue to $11.54 billion and the more-than-doubling of data-center sales to $6.72 billion demonstrate that despite intense competition with Nvidia, AMD continues to capture meaningful share of the AI infrastructure buildout. CEO Lisa Su's projection that data-center revenue will more than double again in 2027 underscores management's confidence in continued customer spending on AI infrastructure.
Yet the market's reaction—a 9% after-hours decline—reveals a deeper truth about investor expectations this year. Shares had surged considerably before the report, likely reflecting bullish sentiment about AMD's AI prospects. The earnings beat and forward guidance were not sufficient to justify the pre-announcement rally, signaling that a significant portion of positive news was already priced in. This gap between what investors had built into the stock and what AMD delivered (even though it was better than consensus) explains why an objectively strong quarter resulted in a sharp sell-off.
AI-summarized, only the topics you pick — one digest a day via Email, Slack, or Discord.
Free · takes 30 seconds · unsubscribe anytime
Ask AI anything about this article. Q&As are published on this page for other readers too.
Supermicro reported a sharp recovery in gross margins and issued fiscal 2027 revenue guidance that exceeded Wa…
IBM and Together AI announced a collaboration to deploy a dedicated Nvidia-powered inference cluster on IBM Cl…
Siliconware Precision Industries (SPIL), a subsidiary of ASE Technology Holding, held a groundbreaking ceremon…
CoreWeave reported second-quarter fiscal 2026 revenue of US$2.6 billion, up 112% year-over-year and 24% sequen…
CoreWeave, an AI cloud provider, more than doubled its second-quarter revenue while managing a $104 billion ba…
Palantir Technologies reported second-quarter revenue up 93% year over year to $1.94 billion on Aug
The AI news that matters, in one minute each morning.
Sign up free