AMD’s Stock Fluctuates Despite Strong Q1 Earnings Report
Shares of Advanced Micro Devices (NASDAQ: AMD) opened strong on Wednesday, climbing as much as 4.9%. However, by 11:29 a.m. ET, the stock had moderated its gains and was up only 0.4%. Despite announcing better-than-expected results, investor sentiment turned cautious.
Impressive First-Quarter Performance
After the market closed on Tuesday, AMD unveiled its first-quarter results, showcasing a record revenue of $7.4 billion—a 36% increase year over year. This led to adjusted earnings per share (EPS) of $0.96, a 55% rise compared to the previous year. These figures surpassed analysts’ expectations, which had forecast revenue of $7.12 billion and EPS of $0.93.
The data center segment significantly contributed to these outcomes, bringing in $3.7 billion in revenue, a 57% increase year on year. This growth stemmed from heightened demand for AMD’s AI-focused Epyc central processing units and Instinct graphics processing units.
CEO Lisa Su remarked, “We delivered an outstanding start to 2025 as year-over-year growth accelerated for the fourth consecutive quarter, driven by strength in our core businesses and expanding data center and AI momentum.”
Market Concerns Weigh In
Despite the strong performance, AMD faced scrutiny from Wall Street analysts. Investors learned about a forthcoming $1.5 billion charge in 2025 related to export restrictions on advanced chip sales to China.
Analysts from Jefferies emphasized that “AI growth is the primary metric for the stock, and on that front, estimates are moving lower.” Similarly, Citigroup analysts expressed unease regarding projections for AI revenue in the first half of 2025, particularly while “almost every other company is witnessing growth in their AI business.”
Nevertheless, a historical perspective suggests a long-term view may outweigh short-term market fluctuations. Currently, AMD trades at 22 times forward earnings, indicating it remains an appealing option for investors looking to capitalize on the AI sector.
Investment Considerations for AMD
Before investing $1,000 in Advanced Micro Devices, consider these insights:
The Motley Fool Stock Advisor team has identified their picks for the top 10 stocks to buy now, notably excluding Advanced Micro Devices. Investors may want to explore these recommendations, which could yield significant returns in the years ahead.
For perspective, consider that if you had invested $1,000 in Netflix when it made the list on December 17, 2004, you would now have $613,546! Or if you’d chosen Nvidia from its selection on April 15, 2005, your investment would have grown to $695,897!
Currently, Stock Advisor has averaged a return of 893%, far exceeding the S&P 500’s 162% during the same period.
*Stock Advisor returns as of May 5, 2025
Citigroup is an advertising partner of Motley Fool Money. Danny Vena has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Jefferies Financial Group. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
