Advanced Micro Devices delivered another blowout quarter, yet its stock still slid on the news. The chipmaker posted second-quarter results on Tuesday that topped analyst expectations across the board, but investors reacted by selling shares rather than celebrating.
For the quarter ended June 27, AMD reported adjusted earnings of $1.66 per share, beating the $1.62 consensus estimate. Revenue came in at $11.54 billion, above the $11.28 billion Wall Street had projected. Total revenue jumped 50% compared to the same period last year, when the company brought in $7.69 billion.
The real engine behind that growth was AMD’s data center business, which produces both the CPUs and GPUs used to power AI workloads. That unit generated $6.7 billion in sales, more than doubling from a year earlier with 107% growth. AMD credited the surge to strong demand for both its processors and graphics chips.
Net income for the quarter reached $2.3 billion, or $1.38 per diluted share, a sharp jump from $872 million, or 54 cents per share, in the prior year.
Spending Concerns Overshadow Strong Numbers
Despite the beat, AMD shares dropped roughly 7% as investors zeroed in on spending. The company spent $808 million on capital expenditures during the quarter, far exceeding the roughly $314 million analysts had anticipated.
That spike raised questions among investors about how much AMD will need to keep pouring into its business to stay competitive in the AI chip race, especially against rival Nvidia.
The stock had already climbed about 140% this year heading into the report, leaving little room for anything short of a flawless showing to satisfy shareholders.
CEO Lisa Su told analysts on the earnings call that data center sales are expected to double again in 2027, with server revenue climbing more than 80% year-over-year in the back half of fiscal 2026. She also pointed to gains in AMD’s CPU business, noting that major cloud providers including AWS, Microsoft, Google and Oracle have been expanding their use of the company’s Epyc processors.
Analysts Still Bullish Despite the Pullback
Wall Street hasn’t soured on AMD. Goldman Sachs analyst James Schneider kept his Buy rating on the stock following the report, pointing to AMD’s upcoming MI-400 series accelerators as a catalyst for growth later this year. His price target of $640 implies roughly 23% upside from Tuesday’s closing price.
More broadly, AMD carries a Strong Buy consensus among analysts, with an average price target near $588, suggesting the market still sees room to run even after this year’s sharp rally.
The company also guided for around $13 billion in revenue for the current quarter, roughly in line with what analysts had been expecting.
