AMD Plunges 11% Post Q4 Earnings: Buy, Sell or Hold the Stock?

Advanced Micro Devices AMD shares have plunged 11% post fourth-quarter 2025 reported on Feb. 3. The company reported non-GAAP earnings of $1.53 per share, which jumped 40.4% year over year and 27.5% sequentially on revenues of $10.27 billion. The top line increased 34.1% year over year and 11.1% sequentially. However, the drop in AMD shares can be attributed to modest first-quarter 2026 guidance. 

The company now expects revenues of $9.8 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of approximately 32% and a sequential decline of approximately 5%. The revenue guidance includes roughly $100 million of MI308 sales to China. AMD expects year-over-year growth in revenues to be driven by Data Center, Client and Gaming segments and modest growth in the Embedded segment. However, sequential revenue decline is attributed to a seasonal decline in Client and Gaming, and the Embedded segment, partially offset by growth in the Data Center segment.

So, what should AMD investors do with the stock? Let’s find out.

AMD’s Prospects Suffer From Stiff Competition

AMD is facing stiff competition across domains, including AI-powered data-centers, high-performance computing and AI PCs from NVIDIA NVDA, Broadcom AVGO and Intel INTC. AMD shares have jumped 93.9% in the past year, outperforming the Zacks Computer and Technology sector’s 23.5% return. The stock has outperformed Broadcom and NVIDIA, shares of which returned 46.7% and 43.1%, respectively, over the same timeframe. However, Intel has outperformed AMD, with shares jumping 139.5%.

AMD Stock’s One-Year Performance

NVIDIA is benefiting from the strong growth of its newer Hopper and Blackwell GPU platforms. Broadcom is benefiting from strong demand for its networking products and custom AI accelerators. Intel is undertaking various strategic decisions to gain a firmer footing in the expansive AI sector. Capital infusion by Softbank, NVIDIA and direct funding from the U.S. Department of Commerce are likely to pave the way for innovation and growth.

AMD’s Stretched Valuation is a Concern

AMD stock is currently overvalued, as the Value Score of D suggests a stretched valuation at this moment.

The stock is trading at a premium, with a forward 12-month price/sales of 7.52X compared with the sector’s 6.54X.

AMD Valuation

Expanding Portfolio to Boost AMD’s AI Footprint

AMD outlined its “AI Everywhere, for Everyone” strategy at the CES 2026 with the introduction of Helios rack-scale platform, Instinct MI400 series lineup and Ryzen AI 400 and AI PRO 400 Series processors for AI PCs. In her CES 2026 keynote, CEO Lisa Su highlighted AMD’s expanding AI portfolio and rich partner base, which is translating AI innovation into real-world impact, from data centers to edge devices. Su emphasized the rapid shift toward “yotta-scale computing,” with global compute capacity projected to grow from about 100 zettaflops currently to more than 10 yottaflops (one yottaflop is equivalent to a computer performing one septillion calculations per second) within five years. 

AMD’s Helios rack-scale platform is suitable for handling yotta-scale AI infrastructure. A single Helios rack can deliver up to 3 AI exaflops and is optimized for massive, energy-efficient training of trillion-parameter models. Helios comprises Instinct MI455X accelerators, EPYC “Venice” CPUs and Pensando “Vulcano” NICs for scale-out networking and the open AMD ROCm software ecosystem. 

AMD envisions the data center total addressable market to hit $1 trillion by 2030, suggesting a CAGR of more than 40% from roughly $200 billion estimated in 2025. The company’s Data Center revenues are benefiting from strong demand for Instinct MI350 Series GPU deployments as well as server share gains thanks to strong adoption of fourth and fifth-generation EPYC chips. Currently, eight of the top 10 AI companies use Instinct to power production workloads across a growing range of use cases.

EPYC-powered public cloud offerings grew significantly in the quarter, with AWS, Google and others launching more than 230 new AMD instances. Hyperscalers launched more than 500 AMD-based instances in 2025, increasing the number of EPYC cloud instances by more than 50% year-over-year to nearly 1,600. The leading server providers now offer more than 3,000 solutions powered by fourth and fifth-generation EPYC CPUs that are optimized for all major enterprise workloads. As a result, the number of large businesses deploying EPYC on-prem more than doubled in 2025.

AMD’s Earnings Estimate Revision Shows Positive Trend

The Zacks Consensus Estimate for 2026 revenues is pegged at $45.21 billion, indicating 30.5% growth from the reported figure in 2025. 

The consensus mark for 2026 earnings is pegged at $6.59 per share, up 5.1% over the past 30 days, suggesting 58% growth from 2025’s reported figure.
 

Advanced Micro Devices, Inc. Price and Consensus

Advanced Micro Devices, Inc. price-consensus-chart | Advanced Micro Devices, Inc. Quote

Conclusion

AMD’s expanding portfolio and growing data center AI footprint are expected to improve its top-line growth. However, its near-term prospects are modest due to stiff competition from NVIDIA in the cloud data center and AI chip markets. Stretched valuation is a concern. These factors are expected to remain an overhang on the stock.

AMD currently has a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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