The Bar is High into AMD Earnings

Advanced Micro Devices (AMD) heads into its earnings report with strong investor optimism and a valuation that reflects high expectations for continued AI driven growth. The stock has rallied sharply into the print tonight after the close, surging more than 110% over the last 12 months. Traders are positioning for another robust quarter fueled by data center momentum, increasing demand for AI accelerators, and strong CPU server sales, amid significant analyst optimism. 

Last quarter, AMD guided for 4Q 2025 revenue of approximately $9.6 billion (+/-$300 million), representing roughly 25% year-over-year growth. The Zacks consensus is for EPS of $1.32, representing a 21% increase over the same period last year. The Data Center segment remains the primary growth driver, with strong demand for Instinct accelerators and EPYC CPUs. AMD’s Data Center segment, which grew 22% year-over-year last quarter, now represents nearly half of company revenue. 

Investors are closely watching the adoption rate of the MI350 series and potential updates regarding the next-gen MI450 accelerator, amid some rumors of production delays. Strong, sustained demand from major cloud providers (hyperscalers) for data center AI infrastructure is expected to solidify AMD's position as the primary alternative to Nvidia (NVDA). AMD continues to take share in the server CPU market with its EPYC processors, contributing significantly to revenue stability and growth.

The stock is up 15% so far in 2026 and is just 7% off its all-time high of $267 from last October. Last night after Monday’s close, Reuters reported that OpenAI is looking for alternatives to Nvidia’s (NVDA) AI chips, which sent the stock higher in afterhours trading. 

Wells Fargo recently reiterated their Overweight rating on AMD with a price target of $345 on the shares. Wells says it would refute the claim that its upcoming MI450-series is delayed. The firm reiterates its belief that AMD will highlight traction toward MI450-series ramp starting in the second half of 2026.

The option market is pricing in a +/- 7% one-day move post earnings. With a high bar going into earnings, investors will focus on MI300 demand, backlog, and competitive performance versus Nvidia. Guidance on its MI450 platform into the second half of the year and gross margins will also be scrutinized. A beat on earnings and above-estimate guidance may be needed with lofty expectations already built into the shares. 

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