3 reasons AMD's stock is falling in the face of its latest earnings report

By Hannah Pedone

Analysts noted that the company delivered muted upside with its results, underwhelmed some investors with its margin outlook and was simply up against high expectations

Shares of AMD were down more than 4% in morning trading on Wednesday.

Advanced Micro Devices delivered a better-than-expected earnings report on paper, but investors seemed to want more from the highflying chip company.

Shares of AMD (AMD) were down 4.6% in Wednesday morning action, and analysts pointed out a few issues that were nagging at investors.

For instance, William Blair analyst Sebastien Naji wrote in a Wednesday note that AMD's results left "much to prove," saying that AMD's "limited upside is unlikely to satisfy elevated investor expectations."

AMD reported revenue of $11.5 billion for the second quarter, up 50% from the previous year and ahead of the $11.3 billion Wall Street was expecting. The company reported adjusted earnings of $1.66 per share for the second quarter, topping estimates for $1.62.

Naji noted "intense competition across its major product lines and a high execution bar to meet," and said he thought investors would "wait for clearer signs that the Helios platform is ramping up well and helping drive share gains in the AI accelerator market."

AMD will begin shipping the Helios rack-scale offering later this quarter, with momentum set to accelerate beyond that point.

Gross margins looked to be another particular pain point for investors. J.P. Morgan analyst Harlan Sur wrote in a Wednesday note that guidance on the metric for the third quarter "landed modestly below" what buy-side investors had indicated they were expecting prior to the report.

AMD reported a second-quarter adjusted gross margin of 56%, above the 55% reported for the first quarter, although its third-quarter outlook called for margins to stay steady at 56%.

However, Sur said that a more important takeaway from the report was management's guidance for the growth trajectory of AMD's data-center business for the 2027 calendar year, pointing to expectations for server CPU revenue growing over 70% from a year before - off an already high revenue base - and revenue from the data-center segment growing over 100% on a year-over-year basis.

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AMD's Wednesday stock pressure could also have to do with high expectations going into the report, Bernstein analyst Stacy Rasgon wrote in a Wednesday note.

He suspects investors were expecting more from AMD, following Intel's (INTC) results posted in July - and added that buy-side investors already had a "fairly bullish outlook." Intel had reported its strongest top-line revenue growth in over 15 years.

AMD's stock is up 131% so far this year.

-Hannah Pedone

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08-05-26 0948ET