AMD Prepares to Unveil Financial Results Amid AI Growth Ambitions

Advanced Micro Devices (NASDAQ: AMD) is a key player in the semiconductor industry, offering a growing array of chips designed for artificial intelligence (AI) applications in data centers and personal computers.

On May 6, AMD is expected to report its financial results for the first quarter of 2025. Investors will look for insights into the company’s progress, particularly any updated forecasts from CEO Lisa Su regarding AI chip sales for this fiscal year.

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Currently, shares of AMD are trading 54% below their all-time high from 2024. Much of this decline followed Trump’s April 2 decision to impose significant tariffs on trading partners. With AMD now at an appealing valuation, this raises the question: is it a good time for investors to buy before the May 6 report?

Image source: Getty Images.

AMD Racing to Compete with Nvidia in AI Technologies

In late 2023, AMD launched its MI300X AI graphics processing unit (GPU) targeting the data center market. This move captured the interest of leading AI developers such as Meta Platforms, Microsoft, and Oracle, with many reporting enhanced performance and cost reductions compared to Nvidia’s H100, which previously dominated.

Recently, AMD unveiled its more powerful MI325X and is set to launch the innovative MI350 series, which leverages a new GPU architecture referred to as CDNA (Compute DNA) 4. This architecture offers a remarkable performance improvement of 35 times over CDNA 3 chips like the MI300X, directly challenging Nvidia’s Blackwell architecture, known as the industry standard.

Throughout the first quarter of 2025, AMD began sending samples of the MI350 to customers, with production ramping up into mid-year. This could mark AMD’s most successful lineup of data center GPUs, potentially enabling the development of advanced AI models. For instance, Oracle has announced plans to build a cluster of 30,000 upcoming MI355X GPUs, indicating strong demand.

Investors will likely gain insights into production and demand when AMD shares its first-quarter financial results on May 6.

Strong Momentum in AMD’s Data Center Segment

During 2024, AMD achieved total revenue of $25.8 billion, reflecting a 14% increase year-over-year. Notably, data center revenue surged by 94%, reaching a record $12.6 billion.

Sales from GPUs represented $5 billion of that figure, and Su anticipates significant growth in this sector, potentially reaching the tens of billions in coming years. Investors should monitor updates on this forecast during the May 6 report, particularly as many customers have recently sampled the MI350 series GPUs.

The company also reported $7 billion in revenue from its client segment, which saw a 52% year-over-year increase. This area houses AMD’s Ryzen AI chips for personal computers, enabling local operation of powerful chatbots and AI applications, thereby improving user experience without needing an internet connection.

However, the gaming and embedded segments experienced declines in 2024. Gaming revenue dropped by 58%, although a recovery may be on the horizon following the release of the highly anticipated Radeon 9070 GPU. Conversely, revenue from the embedded segment fell by 33% due to lackluster demand in key markets such as communications and industrials.

If AMD successfully restores growth in the gaming and embedded sectors in 2025 while amplifying its AI business, the company could achieve a record performance this year.

Image source: Advanced Micro Devices.

AMD Stock Valuation Under Pressure from Tariffs

Like Nvidia and many other industry leaders, AMD relies on Taiwan Semiconductor Manufacturing for a significant portion of its chip production. Recently, President Trump enacted a 10% tariff on all imports into the U.S., alongside a temporary 32% “reciprocal” tariff specifically on Taiwan. While semiconductors are exempt from these penalties, they may still impact AMD’s customer budgets for AI infrastructure.

This situation could lead Su to maintain the current 2025 sales forecast for GPUs when AMD announces first-quarter results on May 6, which represents a risk for AMD stock.

Historically, the imposition of tariffs has triggered volatility. For example, similar tariffs were instituted in 2018, contributing to a nearly 20% drop in the S&P 500. However, the market and broader economy ultimately rebounded.

As May 6 approaches, it may be prudent to focus on AMD’s long-term potential, especially in light of its current stock price. The shares trade at a price-to-earnings (P/E) ratio of 28.2, which is a 31% discount compared to Nvidia’s P/E ratio of 37.1.

Based on Wall Street’s average earnings per share forecast of $4.65 for 2025 (as reported by Yahoo! Finance), AMD stock has a forward P/E ratio of just 20.1. This means the stock would need to rise by 40% by year-end just to maintain its current P/E ratio.

Consequently, while volatility may surround AMD’s forthcoming financial report on May 6, the company’s strategic positioning in the AI market represents significant potential.