AMD Gears Up to Report Q4 Earnings: Here's Why the Stock is a Buy

Core Insights - Advanced Micro Devices (AMD) is expected to report fourth-quarter 2025 results on February 3, with projected revenues of $9.6 billion, indicating a year-over-year growth of 25% and a sequential growth of approximately 4% [1][10] - The Zacks Consensus Estimate for AMD's fourth-quarter revenues stands at $9.67 billion, reflecting a year-over-year growth of 26.2%, while earnings per share are estimated at $1.33, showing a 22% increase year-over-year [2] Revenue and Earnings Estimates - AMD's fourth-quarter guidance suggests strong double-digit growth in the Data Center and Client and Gaming segments, with a return to growth in the Embedded segment [8] - The Data Center segment is expected to see double-digit growth driven by strong demand for EPYC processors and MI350 Series GPUs, while the Client and Gaming segment anticipates an increase in client revenues but a decline in gaming revenues [8][9] Competitive Landscape - AMD faces significant competition from NVIDIA and Intel, with NVIDIA benefiting from its newer GPU platforms and Intel making strategic moves to strengthen its position in the AI sector [12] - Despite competition, AMD's stock has surged 112.6% over the past year, outperforming the Zacks Computer and Technology sector but lagging behind the Computer–Integrated Systems industry [13] Valuation Metrics - AMD's current valuation is considered stretched, with a forward 12-month price/sales ratio of 7.03X, compared to the industry's 4.2X and Intel's 4.05X [16] Strategic Developments - AMD's strategy focuses on "AI Everywhere, for Everyone," with significant advancements in its AI portfolio, including the Helios rack-scale platform and new processor lineups [19][20] - The company anticipates the data center total addressable market to reach $1 trillion by 2030, with a projected CAGR of over 40% from approximately $200 billion in 2025 [22] Conclusion - AMD's expanding portfolio and strong partner base are expected to enhance its revenue growth, supported by robust demand for its EPYC chips and Instinct accelerators, making the stock an attractive investment opportunity [23]