Investment Rating - The report provides a positive outlook for AMD, indicating an outperform rating based on expected revenue growth and strong performance in key segments [19]. Core Insights - AMD reported FY2Q25 revenue of $7.69 billion, exceeding market expectations of $7.43 billion, with a Non-GAAP EPS of $0.48, aligning with consensus [6][1]. - The growth was primarily driven by strong sales of EPYC and Ryzen processors, which offset the negative impact of export controls on Instinct sales [6][1]. - The company anticipates significant revenue contributions from the MI400 series and Helios platform starting in 2026, representing a multi-billion dollar opportunity [8][3]. Revenue Breakdown - For 2Q25, revenue by segment was as follows: - Data Center revenue: $3.2 billion, up 14% YoY, with an operating loss of $155 million due to inventory costs [6][1]. - Client and Gaming revenue: $3.6 billion, up 69% YoY, with an operating profit of $767 million and an operating profit margin (OPM) of 21% [6][1]. - Embedded revenue: $824 million, down 4% YoY, with an operating profit of $257 million and an OPM of 33% [6][1]. Future Outlook - For 3Q25, AMD expects revenue between $8.4 billion and $9.0 billion, with a midpoint of $8.7 billion, representing a 28% YoY increase, primarily driven by high double-digit growth in the Data Center segment [10][4]. - The Non-GAAP gross margin is projected to be 54%, with operating expenses estimated at $2.55 billion [10][4]. AI Business Growth - AMD's AI business continues to show strong growth, particularly with the MI350 series accelerators, which have demonstrated competitive performance in training and inference workloads [7][2]. - The MI355 model has entered mass production ahead of schedule and is expected to significantly contribute to Data Center growth in the second half of the year [7][2]. Product Development - The MI400 series is on track for development, with expected AI performance reaching 40 PFLOPs and leading in memory and bandwidth metrics [8][3]. - The Helios platform, designed for complex AI tasks, is anticipated to enhance performance significantly for advanced models [8][3]. Shipment Delays - The MI308 product is currently under review by the U.S. Department of Commerce, causing delays in shipments, with limited output expected in 3Q25 [9][3].

Core Insights - AMD reported a second-quarter revenue of $7.685 billion, a 32% year-over-year increase, surpassing market expectations of $7.43 billion [1] - The adjusted net profit for the second quarter was $781 million, a 31% decline compared to the previous year, with adjusted earnings per share at $0.48, slightly below the expected $0.49 [1] - The company’s adjusted gross margin was 43%, which could reach 54% without the costs associated with export controls [1] Business Segments - AMD's data center segment generated $3.2 billion in revenue, a 14% year-over-year increase, driven by strong demand for server processors and market share growth in EPYC and Ryzen processors [2] - The "Client and Gaming" segment, which includes CPUs for laptops and desktops as well as GPUs for gaming, saw a 69% revenue increase to $3.6 billion, with PC chip revenue rising 57% to $2.5 billion, supported by strong demand for the AMD Ryzen Zen 5 [2] - AMD's next-generation AI chip, the Instinct MI400 series, is expected to ship in 2025, with commitments from OpenAI's CEO to utilize the new GPU [1][2] Market Challenges - The export restrictions on the MI308 chip to China imposed by the Trump administration resulted in an estimated loss of $800 million for AMD in the second quarter [3] - AMD's executives expressed confidence in the AI market but acknowledged the uncertainty surrounding the sales of the MI308 chip in China, which has not been included in third-quarter revenue expectations [3] - For the third quarter of 2025, AMD anticipates revenue between $8.4 billion and $9 billion, with a projected non-GAAP gross margin of approximately 54% [3]

Core Viewpoint - HSBC believes that AMD's newly launched MI350 series AI accelerators are now competitive with NVIDIA's Blackwell platform in terms of performance and pricing strategy [2][3] Group 1: AMD's Product Launch and Market Position - AMD's stock price increased by over 4% following HSBC's upgrade of its rating from "Hold" to "Buy" and doubling the target price to $200, which is nearly 40% above the current stock price [2] - The MI350 series allows AMD to "catch up" with NVIDIA, as it competes effectively with NVIDIA's current Blackwell AI platform [2] - The upcoming MI400 series is expected to provide greater growth potential in 2026 [2] Group 2: Financial Projections and Market Expectations - Analysts predict significant upside potential for AMD's AI revenue in fiscal year 2026, estimating AI GPU revenue to reach $15.1 billion, which is 57% higher than the market's average expectation of $9.6 billion [3] - The average selling price of the MI355 accelerator is projected to be $25,000, which is $10,000 higher than previous estimates, yet still about 30% lower than NVIDIA's products, contributing to the potential success of the MI350 series [3] - If growth expectations are met, AMD could achieve a higher valuation multiple, with a target price of $200 indicating nearly 40% upside from current levels [3]

Core Viewpoint - AMD is poised to enhance its competitive position in the AI infrastructure market with the upcoming release of its next-generation MI350 and MI400 series accelerators, which are expected to significantly improve performance and deployment capabilities, potentially narrowing the gap with Nvidia [1][10][17]. Group 1: Product Developments - The MI350 series accelerators, including MI350X and MI355X, are set to begin mass production in the second half of 2025, promising up to 4 times improvement in AI computing performance and 35 times efficiency in inference workloads compared to previous generations [2][5]. - The MI400 series accelerators and the Helios system, expected to launch in 2026, will integrate advanced technologies to support complex AI workloads, with a focus on enhancing bandwidth and deployment flexibility [3][8]. - The ROCm 7 software stack has been updated to improve inference performance by 3.5 times and training performance by 3 times, further supporting AMD's hardware advancements [5][9]. Group 2: Market Position and Strategy - AMD's strategy emphasizes optimization and flexibility in deployment, allowing for significant scalability in existing infrastructure, which is crucial for large-scale customers [6][7]. - The integration of the Helios system with MI400 GPUs and Zen 6 EPYC CPUs aims to provide a comprehensive solution for AI workloads, directly competing with Nvidia's offerings [3][8]. - Early adoption by major players like Meta and OpenAI indicates growing confidence in AMD's capabilities within the AI ecosystem, enhancing its market position [10][17]. Group 3: Financial Outlook - Analysts maintain a price target of $200 for AMD, reflecting expectations of growth driven by the upcoming product launches, despite potential economic headwinds affecting AI infrastructure spending [13][14]. - The projected revenue growth for AMD's data center segment is expected to reach $32.6 billion by 2025, with a compound annual growth rate (CAGR) of 10.5% [15]. - The company's ability to provide cost-effective solutions is highlighted, with potential reductions in capital and operational expenditures for clients [5][6].