AMD Shares Dip Despite 30% Earnings Growth and Strong Guidance
Shares of Advanced Micro Devices (AMD) saw a decline of 3.9% following the release of its third-quarter results for 2025. Despite this dip, the chipmaker reported impressive financial growth, achieving a year-over-year revenue increase of 36%, totaling $9.25 billion. In the data center sector, AMD’s revenue rose by 22%, driven by strong demand for its EPYC processors and AI-enabling GPUs.
Strong Earnings Growth and Future Guidance
The earnings report showcased solid performance, with adjusted operating income increasing by 30% to $2.24 billion. The company also reported a GAAP net income of $1.24 billion, reflecting a 61% increase compared to the previous year. Key statistics from the quarter include:
| Metric | Q3 2024 | Q3 2025 | Change YOY |
|---|---|---|---|
| Revenue | $6.82 billion | $9.25 billion | 36% |
| GAAP Operating Income | $724 million | $1.27 billion | 75% |
| GAAP Net Income | $771 million | $1.24 billion | 61% |
| Adjusted EPS | $0.92 | $1.20 | 30% |
Market Context and Investor Sentiment
Despite AMD’s strong earnings performance, the stock’s decline is partially attributed to broader market trends and skepticism surrounding high valuations in the AI sector. Notably, hedge fund manager Michael Burry has recently taken bearish positions on major AI companies.
Revenue Breakdown by Segment
- Data Center: $4.34 billion (22% increase)
- Client Revenue: $2.75 billion (46% increase)
- Gaming Revenue: $1.30 billion (181% increase)
- Embedded Revenue: $857 million (8% decrease)
The data center’s performance is particularly noteworthy, reflecting robust demand for AMD’s products. This segment achieved a 34% sequential growth compared to Q2 2025. Additionally, the company generated $2.16 billion in operational cash flow.
Strategic Partnerships and Fourth Quarter Projections
AMD has made significant strides through partnerships, recently announcing deals with OpenAI and Oracle, including a major supply agreement for GPUs. Looking ahead, management anticipates a fourth-quarter revenue of approximately $9.6 billion, representing a 25% growth year over year, outperforming previous market expectations.
As AMD continues to navigate a challenging market landscape without AI chip sales in China, analysts recommend that investors focus on the underlying fundamentals rather than short-term stock fluctuations. The company remains well-positioned for future growth, backed by a robust performance and optimistic guidance for the following quarter.
