Buy the Spike in AMD Stock After Q1 Earnings?

Core Insights - AMD's stock has increased by 5% following a strong Q1 earnings report and positive market sentiment from a new trade deal announced by President Trump [1] - The company has shown consistent growth, with Q1 sales rising 36% year-over-year, driven by data center and AI demand [3][2] Financial Performance - Q1 sales reached $7.43 billion, exceeding estimates of $7.12 billion, and up from $5.47 billion a year ago [3] - Q1 EPS increased by 55% to $0.96, surpassing the Zacks EPS Consensus of $0.93, marking 25 consecutive quarters of exceeding earnings expectations [3][4] - AMD expects Q2 revenue to be around $7.4 billion, reflecting a 27% growth, despite a projected $700 million revenue reduction due to new export license requirements [4][5] Revenue Guidance - For the full year, AMD anticipates a revenue impact of approximately $1.5 billion from export license requirements, with total sales expected to grow by 21% in fiscal 2025 to $31.31 billion [5][6] - FY26 sales are projected to rise another 19% to $37.17 billion [5] Stock Performance - Despite the recent earnings boost, AMD's stock is down 15% year-to-date, underperforming compared to broader indexes and competitor Nvidia [7] - Over the past three years, AMD's stock has only increased by 19%, significantly lagging behind Nvidia's nearly 600% gain [7] Market Position - AMD is currently the second-largest producer of AI GPUs, trailing Nvidia, and has faced challenges in maintaining growth excitement in recent years [8] - Future stock performance may depend on earnings estimate revisions as analysts assess the impact of tariffs and export license requirements [9]