On Tuesday, the Department of Commerce took a significant step by retracting the Biden Administration's AI Diffusion Rule. This rule, originally set to be enforced in May 2025, was perceived as a potential barrier to American innovation and a strain on international relations. The Department emphasized that these measures would downgrade relations with numerous countries by placing them in a second-tier status.
Simultaneously, the Bureau of Industry and Security (BIS) drafted measures to enhance export control over semiconductor technologies globally. The Under Secretary of Commerce, Jeffery Kessler, highlighted a strategic move to fortify American AI technology partnerships with trusted allies and prevent its acquisition by adversaries.
BIS's actions include advisories indicating that the use of Huawei's Ascend chips internationally breaches U.S. export regulations. Furthermore, guidance was provided to warn about the risks involved with U.S. AI chips aiding Chinese AI model development. These developments could have implications for companies in the semiconductor space such as AMD (AMD, Financial), as well as others within the industry.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 41 analysts, the average target price for Advanced Micro Devices Inc (AMD, Financial) is $129.78 with a high estimate of $200.00 and a low estimate of $75.00. The average target implies an upside of 15.40% from the current price of $112.46. More detailed estimate data can be found on the Advanced Micro Devices Inc (AMD) Forecast page.
Based on the consensus recommendation from 52 brokerage firms, Advanced Micro Devices Inc's (AMD, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Advanced Micro Devices Inc (AMD, Financial) in one year is $162.26, suggesting a upside of 44.28% from the current price of $112.46. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Advanced Micro Devices Inc (AMD) Summary page.
AMD Key Business Developments
Release Date: May 06, 2025
- Revenue: $7.4 billion, up 36% year over year.
- Gross Margin: 54%, up 140 basis points from a year ago.
- Net Income: Increased by 55% year over year.
- Operating Income: $1.8 billion, representing a 24% operating margin.
- Diluted EPS: $0.96, an increase of 55% year over year.
- Data Center Revenue: $3.7 billion, up 57% year over year.
- Client and Gaming Revenue: $2.9 billion, up 28% year over year.
- Embedded Revenue: $823 million, down 3% year over year.
- Cash from Operations: $939 million.
- Free Cash Flow: $727 million.
- Share Repurchase: $749 million returned to shareholders.
- Cash and Equivalents: $7.3 billion at the end of the quarter.
- Second Quarter Revenue Outlook: Approximately $7.4 billion, plus or minus $300 million.
- Second Quarter Gross Margin Outlook: Estimated to be 43%, inclusive of charges.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Advanced Micro Devices Inc (AMD, Financial) reported a 36% year-over-year increase in first-quarter revenue, reaching $7.4 billion, driven by strong growth in data center and client segments.
- The company achieved a 55% increase in net income, supported by a higher percentage of data center product sales and a richer Ryzen processor mix.
- Data center segment revenue grew by 57% year over year, with significant contributions from EPYC CPU and Instinct AI accelerator sales.
- AMD's client revenue increased by 68% year over year, marking the fifth consecutive quarter of revenue share gains, driven by high-end Ryzen processors.
- The company expanded its gross margin for the fifth straight quarter, reaching 54%, up 140 basis points from the previous year.
Negative Points
- Gaming revenue decreased by 30% year over year, primarily due to lower semi-custom sales despite higher Radeon Graphics sales.
- Embedded segment revenue declined by 3% year over year, with a gradual recovery expected in the second half of 2025.
- The new export license requirement for MI308 shipments to China is expected to result in a $1.5 billion revenue reduction for the full year 2025.
- AMD's second-quarter guidance includes an estimated $700 million revenue reduction due to the new export license requirement, impacting data center segment revenue.
- Operating expenses increased by 28% year over year, as AMD continues to invest in go-to-market activities and R&D.
