AMD Reports Mixed Q2 Earnings Amid Revenue Growth, Margin Pressure

AMD reported strong second-quarter revenue growth driven by record server and PC processor sales, reaching $7.68 billion, up 32% year-over-year and surpassing analyst expectations. Despite this top-line beat, the company's operating margin declined to 12% from 22% a year ago, leading to a 31% drop in net income to $781 million, and earnings per share matched estimates but fell from the prior year. Data center sales, including AI-focused MI300 series chips, underperformed expectations, with revenue coming in at $3.2 billion versus the anticipated $3.31 billion, causing investor concerns about AMD's ability to gain market share from Nvidia in the AI chip sector. AMD's stock declined over 4% in after-hours trading following the earnings release, interrupting its recent rally fueled by easing trade tensions and strong semiconductor sector momentum. Looking ahead, AMD forecasts third-quarter revenue around $8.7 billion, driven by growth in computing and AI products, although shipments of AMD Instinct MI308 GPUs to China remain uncertain due to pending U.S. government license approvals. Analysts remain divided, with some viewing AMD as a key competitor to Nvidia, while others express caution and suggest alternatives like Broadcom and Marvell.