AMD Stock Falls 5% After Beating Third Quarter Earnings Estimates

TLDR

• AMD stock dropped 5% despite beating earnings estimates with $1.20 per share versus $1.16 expected and revenue of $9.25 billion versus $8.74 billion expected
• The company reported 36% year-over-year revenue growth and net income increased to $1.24 billion from $771 million
• Fourth-quarter revenue guidance of $9.6 billion topped Wall Street’s $9.15 billion estimate, implying 25% growth
• UBS raised AMD’s price target to $300 from $265 ahead of the company’s analyst day, the first since ChatGPT launched
• Broader market concerns about AI spending sustainability caused investors to pull back from AI-related stocks despite strong fundamentals

AMD posted a double beat on earnings and revenue Tuesday, but investors weren’t buying it. The stock fell nearly 5% in pre-market trading Wednesday.

Advanced Micro Devices, Inc., AMD

The chipmaker reported adjusted earnings of $1.20 per share. That topped Wall Street’s estimate of $1.16 per share.

Revenue came in at $9.25 billion. Analysts had expected $8.74 billion.

That’s a 36% jump in revenue compared to last year. Net income climbed to $1.24 billion from $771 million a year earlier.

Most companies would celebrate those numbers. The market had other ideas.

Guidance Beats Expectations Too

AMD’s fourth-quarter outlook also came in strong. The company expects revenue of about $9.6 billion.

That implies 25% growth and beats Wall Street’s projection of $9.15 billion. Still, the stock couldn’t catch a break.

Margins matched expectations but didn’t exceed them. That seemed to be enough to keep buyers on the sidelines.

The real issue wasn’t AMD’s performance. It was the broader mood around AI stocks.

Investors have started questioning whether massive AI spending will actually pay off. Companies like Nvidia, Meta, and Microsoft have been pouring billions into AI infrastructure.

The payoff remains uncertain. That uncertainty is spreading across the entire sector.

The S&P 500 and Nasdaq both declined Tuesday. AI-related names took the brunt of the selling.

AMD has been slowly closing the gap with Nvidia in AI chip technology. But even progress can’t overcome sour sentiment.

Analysts Remain Optimistic

UBS raised its price target on AMD to $300 from $265. The firm maintained its Buy rating.

The new target represents upside from AMD’s current price around $250. UBS cautioned investors against selling before the company’s analyst day.

This will be AMD’s first analyst day since ChatGPT launched. The event could provide a roadmap for future growth.

UBS expects AMD to outline a path to $15-20 in earnings per share later this decade. That would represent substantial growth from current levels.

The investment bank noted that some AI GPU sales may have shifted from the fourth quarter into the third quarter. This possibly involved Oracle.

AMD addressed concerns about a potential slowdown in its AI GPU business. The company said GPU sales would be weighted toward the second half of 2026 due to an OpenAI ramp.

UBS also highlighted that agentic AI is driving strong refresh cycles in traditional server infrastructure. This segment could represent more than 35% of AMD’s earnings per share in 2026.

The firm sees AMD benefiting from Intel’s struggles. Intel currently lacks a clear product roadmap.

Other analysts have also raised their targets recently. Loop Capital increased its target to $290, while Piper Sandler raised its target to $280.

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