Advanced Micro Devices (NASDAQ: AMD) is set to report second-quarter results after Tuesday’s market close, with a conference call scheduled for 5 p.m. ET. The chipmaker’s stock has more than doubled this year, elevating expectations beyond a simple earnings beat. Wall Street forecasts revenue of $11.3 billion and adjusted earnings of $1.61 per share, with options pricing implying a potential 10% move, reflecting heightened sensitivity to guidance.
The company’s first-quarter performance showed data center revenue surging 57% to $5.8 billion, driven by EPYC server processors and Instinct accelerators. However, analysts are now focusing on the profitability of AMD's aggressive AI partnerships with OpenAI, Meta, and Anthropic. These deals include performance-based warrants that could dilute shares and up to $5 billion in investments tied to deployment milestones, raising concerns about long-term returns.
While demand for AI chips remains strong, gross margin forecasts near 56% and supply chain constraints for GPUs and high-bandwidth memory add uncertainty. Analysts from Bank of America and Wedbush expect a beat-and-raise quarter, but William Blair remains cautious, initiating coverage with a Market Perform rating due to valuation risks. The core question for investors is whether AMD’s future margins can sustain its current forward earnings multiple of 54 times.
