AMD Earnings To Trigger Further Volatility in the Stock (NASDAQ: AMD) – What Next?

Advanced Micro Devices, Inc. (NASDAQ: AMD) has experienced significant stock volatility in recent months, driven by a combination of earnings performance, geopolitical tensions, product launches, and shifting analyst sentiment.

AMD is scheduled to report Q1 2025 results after today's market close (May 6), with analysts projecting revenue of $5.46 billion and EPS of $0.62. However, the data center segment remains under scrutiny. The U.S. government’s tightened export restrictions on advanced GPUs to China, announced last month, could result in an $800 million charge for AMD if licenses for its MI308 chips are denied.

This regulatory hurdle has led analysts at Bank of America and Deutsche Bank to lower price targets, citing reduced visibility in AMD’s AI-driven growth narrative.

As AMD approaches it's Q1 2025 earnings report, with investors weighing long-term growth prospects against a backdrop of short-term volatility and mounting geopolitical risks. The semiconductor giant closed back above $100 in the most recent session, with a solid 5% gain over the past week but still trading more than 20% below its January peak above $130.

The stock has fallen 16.6% year-to-date, underperforming the VanEck Semiconductor ETF (SMH) by 5.5 percentage points. A 35% decline over the past 12 months has AMD firmly in it's own bear market. However, a 15% rebound in late April, driven by broader market optimism, suggests lingering bullish sentiment. Technical analysts identify key support levels at $110 (2023 trendline) and $95 (May 2023 low), with resistance near $130 (50-day moving average).

Options markets priced in an 8% post-earnings move for AMD, with a put/call ratio of 0.85, indicating bearish hedging activity ahead of the print. A miss could see shares retest $95, while better-than-expected guidance might catalyse a rally toward $120.

Mixed Performance Drives Volatility

AMD’s Q4 2024 earnings report, released back on February 4, revealed a critical weakness in its data center segment. While the company surpassed revenue expectations ($6.82 billion vs. $6.71 billion consensus) and matched earnings per share (EPS) estimates ($0.92), shares plummeted 9% in after-hours trading due to disappointing data center sales.

CEO Lisa Su’s guidance for a 7% sequential decline in Q1 2025 data center revenue further rattled investors, as this segment is central to AMD’s artificial intelligence (AI) ambitions. The market reaction underscored concerns about AMD’s ability to compete with Nvidia, which dominates the AI accelerator market.

The U.S. Department of Commerce’s restrictions on advanced GPU exports to China have directly impacted AMD’s MI308 shipments, which are critical for AI workloads. While AMD has redirected some capacity to Japan and Europe, analysts estimate a 10–20% demand destruction in key markets. Compounding these challenges, former President Donald Trump’s criticism of the CHIPS Act has introduced uncertainty, with AMD executives seeking legal assurances to safeguard subsidies for domestic fabrication projects.

ZT Systems Acquisition and AI Infrastructure Push

AMD then finalized its $4.9 billion acquisition of ZT Systems, a leader in AI-optimised server design during April. The move aims to accelerate AMD’s entry into the AI infrastructure market, which is projected to exceed $1 trillion by 2030. However, integration risks and ZT’s reliance on legacy data center customers have tempered optimism. While the acquisition aligns with AMD’s long-term AI strategy, near-term execution challenges have contributed to a “cautiously neutral” outlook among analysts.

Analysts have a very mixed view when it comes to AMD. The consensus 12-month price target stands at $123.50, implying a 23% upside from the most recent price action. However, 2025 EPS estimates have trended downward to $4.59 (from $4.60), with revenue projections at $31.87 billion.

Bears highlight AMD’s forward price-to-sales ratio of 5.12x, a 67% premium to the semiconductor industry average, as evidence of overvaluation.

Hedge funds reduced their AMD holdings by 12% in Q1 2025, reflecting caution amid AI monetization delays. Conversely, retail investors have increased exposure, betting on AMD’s long-term GPU and CPU roadmap.

This divergence underscores the stock’s risk-reward profile: high growth potential tempered by execution risks.

While AMD’s expanded EPYC server portfolio and AI investments position it for long-term growth, near-term headwinds in China and margin compression warrant caution. In the interim, volatility is likely to persist, with $95–$130 forming a critical trading range.