Diversified end markets could make this AI stock popular in the long run, and that could send its shares soaring.The rapid expansion of artificial intelligence (AI) technology has brought several companies into the limelight in the past few years. For instance, Nvidia, which is in the business of designing semiconductors, became an instantly recognizable name thanks to the role it plays in the proliferation of AI.But AI adoption is still in its early phases. There are likely to be more companies that will b ...

After a strong rally earlier this year, Advanced Micro Devices (AMD) stock pulled back slightly, sliding more than 12% from its recent peak of $186.65. The dip comes as the chipmaker takes a financial hit from U.S. export restrictions to China, which impacted its financials during the second quarter. In its latest earnings report, AMD disclosed a year-over-year decline in artificial intelligence (AI) revenue within its data center segment. Management stated that the setback originated from the loss of MI3 ...

Core Insights - Advanced Micro Devices (AMD) is experiencing significant growth in the AI infrastructure market, supported by its advanced product offerings and strategic investments in AI hardware and software [1][2]. Financial Performance - In Q2 2025, AMD reported record revenues of $7.7 billion, marking a 32% year-over-year increase, driven by strong demand for its EPYC and Ryzen processors, as well as the ramp-up of its MI350 series GPUs [2][10]. - The consensus estimate for AMD's 2025 earnings is $3.95 per share, reflecting a 19.34% year-over-year growth [13]. Product Development and Partnerships - AMD has expanded its product portfolio with the launch of the Instinct MI350 Series GPUs and open rack-scale AI infrastructure, showcasing advancements in AI performance and energy efficiency [3][10]. - The company has formed strategic partnerships, including a collaboration with Oracle to build a 27,000-node AI cluster and an expanded partnership with Cohere to integrate AI services [3][4]. Competitive Landscape - AMD faces stiff competition from NVIDIA and Intel, both of which are also expanding their presence in the AI infrastructure market [5]. - NVIDIA reported a 56% year-over-year increase in data center revenues, reaching $41.1 billion in Q2 2026, while Intel is gaining traction with its Xeon 6 Processors being adopted by major industry players [6][7]. Stock Performance and Valuation - AMD shares have increased by 33.1% year to date, outperforming the broader Zacks Computer & Technology sector's return of 21.7%, but underperforming the Zacks Computer-Integrated Systems industry's increase of 41.3% [8][10]. - The stock is trading at a premium with a forward 12-month Price/Sales ratio of 7.01X compared to the industry average of 3.92X, indicating a Value Score of F [11].

Core Insights - Advanced Micro Devices (AMD) and Amphenol (APH) are significant contributors to the technology supply chain, with AMD focusing on semiconductors and APH on connectors and interconnect systems [1] - The global semiconductor market is projected to grow from $755.28 billion in 2025 to $2,062.59 billion by 2032, indicating a CAGR of 15.4% [2] - The global connector market is expected to increase from $91.31 billion in 2025 to $147.44 billion by 2032, reflecting a CAGR of 7.1% [3] AMD Insights - AMD is experiencing strong demand for its EPYC and Ryzen processors, particularly in data centers, PCs, and embedded systems [4] - Data Center revenues for AMD rose 14.3% year over year to $3.240 billion in Q2 2025, making up 42.2% of total revenues [5] - AMD is enhancing its AI market presence with new Instinct MI350 Series GPUs and collaborations with Red Hat for AI inference and enterprise applications [6][7] APH Insights - Amphenol's diversified business model and strong portfolio of high-technology interconnect products are key growth drivers [8] - APH launched new liquid cooling connector series aimed at improving thermal management in AI data centers and EV charging infrastructure [9] - APH's order growth surged 36% year over year to $5.523 billion in Q2 2025, with a book-to-bill ratio of 0.98:1 [10] Performance and Valuation - Year-to-date, AMD shares have increased by 35.5%, while APH shares have surged by 56.6% [11] - Both companies are currently considered overvalued, with AMD trading at a forward Price/Sales ratio of 7.26X compared to APH's 5.83X [15] - The Zacks Consensus Estimate for AMD's 2025 earnings is $3.94 per share, reflecting a 19.03% year-over-year increase, while APH's estimate is $3.02 per share, indicating a 59.79% increase [18] Conclusion - Amphenol is viewed as having more upside potential due to its diversified portfolio, robust earnings growth, and better valuation metrics compared to AMD [21] - AMD's growth is supported by its expanding portfolio and partnerships, but it faces stiff competition, particularly from NVIDIA [22]

Core Insights - Advanced Micro Devices (AMD) reported second-quarter 2025 non-GAAP earnings of 48 cents per share, exceeding the Zacks Consensus Estimate by 2.13%, but down 30.4% year over year [1] - Revenues reached $7.685 billion, surpassing the Zacks Consensus Estimate by 3.74%, marking a 31.7% year-over-year increase and a 3.3% sequential rise, driven by record sales of Ryzen and EPYC processors [1] Financial Performance - Data Center revenues increased 14.3% year over year to $3.240 billion, representing 42.2% of total revenues, although they decreased 11.8% sequentially [3] - Client and Gaming segment revenue was $3.6 billion, up 69% year-over-year, with the Client segment growing 67.5% to $2.499 billion, accounting for 32.5% of total revenues [6] - The Gaming segment's revenues rose 73.1% year over year to $1.122 billion, driven by strong demand for Radeon GPUs and collaborations with Microsoft and Sony [8] Product Developments - AMD expanded its collaboration with Red Hat to enhance AI inference and enterprise application deployment using AMD Instinct GPUs and EPYC CPUs [4] - The company launched the EPYC 4005 Series processors, targeting enterprise-grade performance for growing businesses [5] - New Ryzen Threadripper 9000WX and PRO 9000X Series processors were announced, aimed at high-performance workstation applications [7] Margin and Expenses - Non-GAAP gross margin contracted by 990 basis points year-over-year to 43.3%, primarily due to an $800 million inventory write-down related to U.S. export controls [11] - Non-GAAP operating expenses increased 32.2% year over year to $2.429 billion, leading to a non-GAAP operating margin of 11.7%, down from 21.7% in the previous year [11] Cash Flow and Shareholder Returns - As of June 28, 2025, AMD had cash and short-term investments of $5.867 billion, down from $7.310 billion in March 2025 [12] - Free cash flow was $1.180 billion in Q2 2025, with a free cash flow margin of 15%, and AMD returned $478 million to shareholders through a share repurchase program [13] Future Guidance - AMD expects third-quarter 2025 revenues of $8.7 billion (+/-$300 million), indicating approximately 28% year-over-year growth and 13% sequential growth [14] - The company anticipates a non-GAAP gross margin of roughly 54% for Q3 2025, with operating expenses expected to be nearly $2.55 billion [14]

Financial Performance - AMD achieved a record second quarter revenue of $7.7 billion, a 32% year-over-year increase[18] - The GAAP gross margin was 40%, a decrease of 9 percentage points year-over-year, while the non-GAAP gross margin was 43%, a decrease of 10 percentage points year-over-year[22, 30, 31] - GAAP diluted earnings per share (EPS) was $0.54, and non-GAAP diluted EPS was $0.48[28] Segment Performance - Data Center segment revenue reached $3.24 billion, up 14% year-over-year, but with an operating loss of $155 million[32] - Client and Gaming segment revenue was $3.621 billion, a significant increase of 69% year-over-year, with an operating income of $767 million[32] - Embedded segment revenue was $824 million, a decrease of 4% year-over-year, with an operating income of $275 million[32] Future Outlook - AMD projects revenue of approximately $8.7 billion, plus or minus $300 million, for Q3 2025[37] - The company anticipates a gross margin of around 54% for Q3 2025[37] - AMD expects operating expenses of approximately $2.55 billion for Q3 2025[37]

Core Insights - Advanced Micro Devices (AMD) is experiencing sustained gross margin expansion, attributed to a favorable product mix of high-end Ryzen processors and increased data center product sales, resulting in a gross margin of 53.7% in Q1 2025, marking the fifth consecutive quarter of growth [1][10] Group 1: Product Demand and Performance - Strong demand for high-end Ryzen CPUs in gaming and commercial PCs is enhancing the product mix, supporting margin expansion [2] - The latest Ryzen CPUs, particularly those based on the Zen 5 architecture, have seen significant demand, with new products like the Ryzen 9 9950 X3D achieving sellout records [3] - Higher average selling prices (ASPs) from sales of premium Ryzen processors are positively impacting gross margins [3] Group 2: Financial Guidance and Margins - AMD anticipates gross margins to remain robust, projecting approximately 54% for Q2 2025, excluding an $800 million inventory-related charge due to MI308 export controls [4][10] - The company has achieved a 140 basis point year-over-year increase in Non-GAAP gross margin [1] Group 3: Competitive Landscape - AMD faces significant competition from NVIDIA and Intel in both data center and client segments, yet continues to expand its margins through a favorable product mix and strong demand for high-end offerings [5] - NVIDIA's gross margin declined by 12.5 percentage points to 61% in Q1 2026, primarily due to a $4.5 billion charge related to inventory issues [6] - Intel's non-GAAP gross margin fell to 39.2% from 45.1% year-over-year, impacted by impairment charges and restructuring costs [7] Group 4: Stock Performance and Valuation - AMD shares have increased by 19% year-to-date, outperforming the broader Zacks Computer & Technology sector, which returned 6.1% [8] - The stock is trading at a forward 12-month Price/Sales ratio of 6.78X, compared to the industry average of 3.87X, indicating a premium valuation [11] - The Zacks Consensus Estimate for Q2 2025 earnings is 54 cents per share, reflecting an 8.4% decline over the past 30 days and a 21.74% decrease year-over-year [13]

Group 1: AI Market Overview - Artificial intelligence (AI) is projected to have a $20 trillion impact on the global economy by 2030 [1] - There is a significant influx of investment into data centers to support an AI-driven economy [3] Group 2: CoreWeave - CoreWeave is a leading operator of purpose-built data centers for AI, capitalizing on the demand for modern infrastructure [3] - The company reported a revenue increase from $189 million in Q1 2024 to $982 million in Q1 2025 [4] - CoreWeave has a revenue backlog of $25.9 billion, a 63% increase year-over-year, largely due to an $11.9 billion deal with OpenAI [5][6] - The company generates most of its revenue from long-term contracts, which enhances visibility for future revenue [6] - CoreWeave has secured 420 megawatts of power for its 33 AI-optimized data centers and has contracts for up to 1.6 gigawatts over several years [8] - The stock has a market cap of $53 billion, with a forward price-to-sales ratio of 11 based on 2025 revenue outlook [9] Group 3: Advanced Micro Devices (AMD) - AMD is positioned as a competitor in the AI chip market, which is valued at $500 billion, despite Nvidia's dominance [10] - The company has seen a 36% year-over-year revenue increase, driven by strong demand in data centers and Ryzen processors [12] - AMD's adjusted earnings increased by 55% year-over-year, indicating robust growth potential despite mixed results in other segments [12] - The launch of over 30 computing workloads using AMD's fifth-generation EPYC Turin chip across major cloud providers highlights its market presence [13] - AMD's acquisition of ZT Systems aims to enhance its competitive position by offering integrated AI computing systems [14] - The stock is trading at 28 times 2025 earnings estimates, suggesting it may be undervalued given its growth prospects [15]

Core Viewpoint - Advanced Micro Devices (AMD) is transitioning from a traditional chip company to a significant player in the artificial intelligence (AI) infrastructure market, establishing a strong presence in the AI data center business while competing with Nvidia [1] Data Center Business Growth - In Q1 2025, AMD's data center revenue increased by 57% year over year to $3.67 billion, accounting for nearly half of the company's total revenue [2] - The demand for AMD's EPYC server processors and Instinct AI accelerators is driving robust growth in the data center business, with AMD capturing a 25.1% share of the server CPU market, up 2 percentage points year over year [5] - The company is collaborating with major cloud players on the development of fifth-generation EPYC CPUs, codenamed "Turin," and expects enterprise adoption of EPYC processors to accelerate with over 150 server platforms becoming available soon [5] AI Business Development - AMD's data center AI business is gaining traction, with multiple Tier 1 cloud and enterprise customers adopting its Instinct AI accelerators [6] - The company is sampling the next-generation MI350 series GPUs, which are expected to offer higher performance and efficiency, with production on track for mid-2025 [8] - AMD's acquisition of ZT Systems allows it to sell fully integrated AI systems, enhancing its data center business prospects [11] Software Ecosystem - AMD is enhancing its software ecosystem, particularly the ROCm software stack, with biweekly updates and increased access for open-source developers [9][10] Client Segment Performance - The client segment reported a 68% year-over-year revenue increase to $2.3 billion in Q1, driven by high demand for desktop and Ryzen processors [12] - Sales of AI-capable processors grew over 50% quarter over quarter, with AMD also making strides in the commercial PC market [13] Valuation - AMD shares are trading at 21.7 times forward earnings, which is lower than Nvidia's forward P/E multiple of 25.4, indicating a potentially attractive valuation [14]

Core Viewpoint - Advanced Micro Devices (AMD) is expected to report first-quarter 2025 results on May 6, with projected revenues of $7.1 billion, indicating a year-over-year growth of approximately 30% and a sequential decline of about 7% [1] Revenue Estimates - The Zacks Consensus Estimate for AMD's first-quarter revenues is $7.12 billion, suggesting a year-over-year growth of 30.11% [2] - The consensus estimate for first-quarter earnings is 93 cents per share, reflecting a year-over-year growth of 50% [2] Segment Performance - AMD's data center segment is anticipated to see significant revenue growth, driven by strong sales of EPYC processors and demand for AI applications, with first-quarter revenues estimated at $3.4 billion, a year-over-year increase of 47.5% [5] - The client segment is also expected to grow, with revenues projected at $2.04 billion, indicating a year-over-year growth of 49.3% [6] - However, the embedded and gaming segments are expected to decline, with embedded revenues estimated at $570 million (a 0.9% decline) and gaming revenues at $509 million (a 38.1% decline) [7] Stock Performance - AMD shares have decreased by 17.9% year-to-date, underperforming the Zacks Computer and Technology sector's decline of 9% and the Computer – Integrated Systems industry's decline of 7.2% [8] Valuation Metrics - AMD's current valuation is considered stretched, with a forward 12-month price/sales ratio of 4.68X, compared to the industry average of 2.90X [11] Strategic Partnerships - AMD benefits from a strong partner base, including major companies like Microsoft, Oracle, Dell Technologies, and IBM, which enhances its market position [14] - The demand for AI accelerators, particularly the Instinct MI300 series, is expected to continue growing, further boosting data center revenues [15] Conclusion - AMD's expanding portfolio and strategic acquisitions are likely to improve top-line growth despite weaknesses in the embedded and gaming segments and competition from NVIDIA [18]