Summary
AMD reported Q2 2025 revenue of $7.7B (+32% YoY), driven by strength in data center and PC chips. EPS landed at $0.48, down 30% YoY, largely due to an $800M inventory charge related to AI chip restrictions in China. Despite the dip in profitability, AMD issued strong Q3 guidance and remains confident in its AI roadmap. GAR Capital’s Masterclass caught a 20% gain on puts before the close — locking in profits before AMD fell hard after hours.
Market Movers
No market movers this week..
📚 Deep Dive 📚
🔥 AMD Earnings: Strong Growth, but Valuation & Margins Raise Questions
Advanced Micro Devices (AMD) reported another quarter of solid growth, but the market wasn’t impressed, sending shares lower after hours. The stock closed at $176.78 (-1.4%) in regular trading and slipped another -5% after hours on margin compression, tariff-related charges, and guidance that fell short of sky-high expectations.
📊 Q2 2025 Earnings Recap
- Revenue: $7.7B (+32% YoY) vs. $7.41B expected ✅
- EPS (Adjusted): $0.48, in line with estimates ❌ down from $0.69 last year
- Gross Margin: 43% (54% excluding inventory write-downs)
- Free Cash Flow: $1.2B
- Key Drivers: Strong EPYC & Ryzen processor sales, commercial PC market share gains, ZT Systems acquisition bolstering data center capabilities
🔮 Q3 2025 Guidance
- Revenue: $8.7B, driven by double-digit growth in data center & client segments
- AI Expansion: Expected to ramp significantly, with MI400 series launch in 2026
- CEO Lisa Su: “We see a clear path to scaling our AI business to tens of billions in annual revenue.”
📉 Market Context & Reaction
- Shares are up +130% since April lows ($76 → $176), recently hitting $182.50 (near 52-week high)
- P/E Ratio: 127.1 — firmly in premium territory
- Selling pressure looks like profit-taking after an unsustainable run unless backed by triple-digit growth, blowout guidance, or massive buybacks
- After-hours drop tied to margin compression and tariff-related charges
📈 Technical Picture
- Resistance: $185 (daily chart)
- Short-Term Support: $160 (possible bull flag bounce if held)
- Fair Value Zone: $145–$150 (July breakout level — ideal buy-the-dip area)
- A retest of $145–$150 could set up an attractive long-term entry
🧠 GAR Capital Take
AMD remains one of the AI chip leaders with a clear long-term growth path. Q2 showed strong revenue momentum, but the EPS decline and margin compression remind us that the road ahead isn’t without bumps.
Near-term, the stock looks extended after more than doubling in four months. For those who’ve been riding this move — trimming at resistance could be wise. For new buyers — patience for a pullback toward $145–$150 could offer a much better risk/reward setup.
🛎️ Did GAR Trade This Name?
Yes — and it played out beautifully. The GAR Capital Masterclass caught a +20% gain on AMD puts just before the close. AMD dropped sharply after hours, and any students who held runners likely made even more. Either way — we showed up, took the setup, and locked in profits before the bell. Textbook execution.
We’ll continue trading AMD via options, but we’re not looking to initiate long stock positions just now.
– Carlos G.
✅ Bottom Line:
- ✅ Strong revenue growth & AI momentum
- ⚠️ Margins and valuation are stretched
- 💎 Best opportunities may come on dips toward fair value