Morningstar

AMD Earnings: Strong PC Processor Revenue Is Encouraging

We’ve raised our Uncertainty Rating for AMD stock because of tariff and geopolitical concerns.

In this photo illustration, the AMD company logo is seen displayed on a screen.
STRF/STAR MAX/IPx via AP
Securities in This Article
Advanced Micro Devices Inc
(AMD)

Key Morningstar Metrics for Advanced Micro Devices

What We Thought of Advanced Micro Devices’ Earnings

Advanced Micro Devices’ AMD first-quarter revenue grew 36% year over year and was above the high end of guidance. AMD’s second-quarter forecast is for 27% growth year over year, above FactSet consensus estimates. Adjusted EPS will dip due to a previously stated $800 million writeoff of AI chips built for China.

Why it matters: AMD’s results reinforce our thesis that the firm is poised for processor (CPU) share gains from Intel in PCs and servers. AMD’s AI GPU remains in focus. It’s a mixed bag, with decent first-quarter results but a bigger headwind than we anticipated from US restrictions on MI308 chip sales into China.

  • Intel saw a rise in low-price CPU sales amid tariff and macro concerns in the first quarter. Encouragingly, AMD saw the opposite, with 68% year-over-year revenue growth in its client segment, boosted by sales of higher priced CPUs in both desktops and notebooks.
  • AMD’s data center segment grew 57% year over year. Server CPU sales were solid on a year-over-year basis, while artificial intelligence GPU revenue was in line with management’s expectations.

The bottom line: We maintain our $120 fair value estimate for narrow-moat AMD but raise our Uncertainty Rating to Very High from High because of tariff and geopolitical concerns. Shares appear undervalued, as AMD’s potential share gains in CPUs appears to be underestimated.

  • We see no signs of AMD’s CPU share gains over Intel slowing down. In AI GPUs, restrictions on shipments into China will be a headwind, but AMD’s non-China opportunities appear promising. Its large upcoming AI cluster with Oracle may serve as a model for future AMD AI adoption.

Coming up: AMD expects June revenue to be $7.4 billion. Client (PC) and gaming revenue should rise about 10% sequentially, but data center revenue should be down. Within data center, server CPU sales should be decent, but AI GPUs will face a $700 million shortfall from the China restrictions.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

Sponsor Center