AMD Stock Falls Despite Strong Earnings Amid China Uncertainty 2025

Prime Highlights

AMD Q2 revenue beat expectations with a firm AI-powered Q3 guidance.
Despite that, AMD shares fell more than 6% as China export concerns and gigantic inventory charge pummeled the stock.

Key Facts

AMD recorded an $800 million charge on halted exports to China.
Gross margins declined to 43%, although they might have stayed at around 54% excluding the charge.

Key Background

Advanced Micro Devices (AMD) posted healthy second-quarter finances, with $7.7 billion in revenue, up 32% year over year, propelled by superb client, gaming, and data-center business. Even following such triumphs and on-target per-share profit of $0.58, however, AMD stock fell more than 6% after hours.

The biggest dampener on investor sentiment was a whoppin’ $800 million inventory charge on U.S. export bans of AMD’s MI308 AI chips to China. The chips are utilized in AMD’s much-awaited Instinct line that are utilized in artificial intelligence datacenters. Because of the suspended exports, AMD reported lower-than-anticipated margins, and its adjusted gross margin declined to 43%. Without the China charge, the margin would have been roughly 54%, showing the magnitude of the impact.

In the future, AMD had earlier forecasted third-quarter revenues of around $8.7 billion, minus or plus $300 million, above Street expectations. Forecast does not include any China revenue from MI308 chips. AMD CEO stated that U.S. officials’ clearance to manufacture additional exports remains undetermined and would take a couple of quarters to resolve.

AMD is optimistic regarding its competitive placement in the AI chip market, particularly with its MI355 accelerator from the MI350 series scheduled to be released later. It thinks that its new chips are able to compete with the offerings of competitors, which are Nvidia’s, and is anticipating long-term demand growth both in the AI and high-performance computing segments. The short-term decline is possible, but experts believe the recent decline in AMD stock to be a buy again, provided the geopolitical tensions cool down.