AMD ($AMD) Q2 Shock: Record Revenue Buried Under Inventory Write-Down & Earnings Miss
AMD just posted its highest-ever quarterly revenue—but Wall Street's only seeing red.
The chipmaker's Q2 earnings stumbled despite the top-line milestone, with inventory corrections and supply chain hiccups dragging down results. Investors expected a victory lap—instead they got a fire sale.
Here's the damage:
• Record revenue? Check.
• Gross margins squeezed by unsold stock? Also check.
• Guidance that suggests 'peak silicon' might be behind us? Oh boy.
Analysts are now questioning whether AMD's data center momentum can offset the PC market's collapse—or if this is another case of 'great tech, terrible timing.' (Cue the usual hedge fund chorus: 'We’re long-term bullish but—')
One thing's clear: in semiconductors, even record numbers can leave you feeling empty. Just ask the bagholders.
TLDR
- AMD reported record Q2 revenue of $7.7B, up 32% YoY
- EPS came in at $0.48, below expectations, due to an $800M inventory write-down
- Gross margin was 43%, would have been 54% without inventory charges
- Client and Gaming revenue soared 69%, driven by Ryzen Zen 5 CPUs
- China export controls on MI308 chips hit Data Center margins hard
Advanced Micro Devices Inc. (NASDAQ: AMD) closed at $174.31 on August 5, down 1.40%, before plunging another 6.56% in pre-market trading to $162.88 following its Q2 2025 earnings release.
Advanced Micro Devices, Inc. (AMD)
The semiconductor giant posted $7.7 billion in revenue, a 32% year-over-year increase, but earnings per share fell short of expectations due to a substantial inventory write-down related to China export restrictions.
Highlights from the Q2 2025 Report (Earnings Date: August 5, 2025)
AMD reported a net income of $872 million, or $0.54 per share, a strong improvement from $265 million a year ago. However, adjusted EPS landed at $0.48, below the $0.49 expected, dragged down by a one-time $800 million inventory charge tied to halted MI308 GPU shipments to China. Excluding that charge, gross margin WOULD have been 54%, but it settled at 43% for the quarter.
Advanced Micro Devices, $AMD, Q2-25 Results:
📊 Adj. EPS: $0.48 🟢
💰 Revenue: $7.69B 🟢
📈 Net Income: $872M
🔎 Record revenue driven by server and PC processor sales despite export restrictions on data center GPUs. pic.twitter.com/WpvXmzMF34
— EarningsTime (@Earnings_Time) August 5, 2025
Segment Performance: CPUs and Gaming Drive Growth
Client and Gaming: Revenue from this segment surged 69% YoY to $3.6 billion. Client revenue jumped 57% to $2.5 billion, fueled by demand for AMD’s new Ryzen Zen 5 desktop CPUs. Gaming revenue reached $1.1 billion, up 73%, boosted by custom chips for consoles and gaming GPUs.
Data Center: Revenue ROSE 14% to $3.2 billion, but the segment reported an operating loss of $155 million due to the MI308 export halt. Demand for EPYC CPUs remained strong, especially for AI workloads and cloud capex expansions.
Embedded: Revenue came in at $824 million, down 4% YoY amid mixed market demand.
Outlook: Strong Revenue Guidance but China Risk Lingers
AMD expects Q3 2025 revenue of approximately $8.7 billion, plus or minus $300 million. Gross margin is projected around 54%. However, the outlook excludes any revenue from MI308 shipments to China, as license approvals remain pending with the U.S. Commerce Department.
CEO Lisa Su emphasized ongoing partnerships with top AI players including Meta and OpenAI. The company is betting on the next-gen Instinct MI350 GPU, expected to rival Nvidia’s GB200 series in AI training and inference.
Financials & Capital Returns
- Free cash flow exceeded $1 billion
- AMD repurchased $478 million in shares during the quarter
- Cash and equivalents totaled $5.9 billion
- Long-term debt stood at $3.2 billion
Despite geopolitical headwinds, AMD remains confident in its data center and AI strategy, with Su stating that seven of the top 10 model builders are using Instinct GPUs.
