Buy the Spike in AMD Stock After Q1 Earnings?

Advanced Micro Devices’ AMD stock has risen 5% since surpassing its Q1 expectations on Tuesday, with the post-earnings rally gaining steam as President Trump boosted markets by announcing a new trade deal with the United Kingdom.

With Trump revisiting the rhetoric of keeping chip manufacturing dominance in the U.S., it’s certainly a worthy topic of whether now is a good time to buy AMD stock for more upside.

AMD’s Consistency Continues

Stating AMD delivered an outstanding start to the year despite evolving dynamics related to tariffs and the regulatory environment, CEO Lisa Su highlighted that the company’s growth accelerated for the fourth consecutive quarter.

Driven by Data Center and AI momentum, AMD’s Q1 sales spiked 36% to $7.43 billion compared to $5.47 billion a year ago, and topped estimates of $7.12 billion. Notably, AMD has surpassed top line expectations for 10 straight quarters. On the bottom line, Q1 EPS climbed 55% to $0.96 versus $0.62 a share in the prior year quarter. Exceeding the Zacks EPS Consensus of $0.93, AMD has now reached or exceeded earnings expectations for 25 consecutive quarters.

AMD’s Revenue Guidance

Providing Q2 guidance, AMD expects revenue at $7.4 billion plus or minus $300 million, which would reflect 27% growth. This is on par with the current Zacks Consensus (Current Qtr Below) and includes an estimated $700 million revenue reduction from the new export license requirements for its MI308 AI accelerator chips to China, a modified version of its superior MI300X chip.

For the full year, AMD estimates the revenue impact due to the export license requirement to be approximately $1.5 billion. Based on Zacks' estimates, AMD’s total sales are now expected to increase 21% in fiscal 2025 to $31.31 billion compared to $25.79 billion last year. Plus, FY26 sales are projected to rise another 19% to $37.17 billion.

AMD Stock Performance

Despite the post-earnings bump, AMD stock is still down 15% year to date, a steeper decline than the broader indexes and chip competitor Nvidia’s NVDA -12%. Over the last three years, AMD is only up +19%, trailing the market’s returns and Nvidia’s eye-popping gains of nearly +600%.

Bottom Line

Although AMD is currently the second-largest producer of AI GPUs (Graphics Processing Units) behind Nvidia, the excitement for its growth potential has worn off in recent years. For now, AMD stock lands a Zacks Rank #3 (Hold) following its favorable Q1 report.

To that point, more upside may largely depend on the trend of earnings estimate revisions in the coming weeks as analysts digest the impact that tariffs will have on the chipmaker. This includes the export license requirements, as the ongoing trade war with China plays out.  

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

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