AMD's Mixed Q2 Performance Raises Eyebrows

In a recent unveiling of its second quarter (Q2) 2025 results, Advanced Micro Devices (AMD) delivered a performance that initially seemed promising but ultimately left investors feeling uneasy. While the company's Q2 revenue surpassed Wall Street's predictions, its earnings matched expectations, raising red flags about a significant drop in artificial intelligence (AI) business revenue.

The AI Buzz and Disappointing Results

As anticipation surged ahead of these results, fueled by AMD's spotlight at the Advancing AI event, hopes were high for its new graphic processing units (GPUs). Investors were eager to witness AMD’s strides against Nvidia, its fierce competitor in the AI landscape. However, the Q2 results were a letdown, especially in the areas of data center growth and revenue from AI. AMD attributed the decline to stringent U.S. export restrictions affecting sales to China and a shift towards next-generation chip offerings.

Analysts Split on AMD's Future

Despite mixed results, many analysts remain optimistic about AMD's potential in both the CPU and GPU markets, acknowledging upcoming opportunities in AI. Yet, a cautious few are holding back. Goldman Sachs analyst James Schneider increased his price target from $140 to $150 but kept a Hold rating, indicating he sees momentum with AMD's Data Center GPU solutions. He anticipates that the MI355 chip may catalyze robust growth in the third and fourth quarters of 2025.

However, Schneider is cautious about the long-term scalability of AMD's Data Center GPUs and flagged concerns over elevated operating expenses linked to AI operations.

Similarly, Morgan Stanley’s Joseph Moore revised his price target down from $185 to $168, reiterating a Hold rating. He acknowledged that while AMD’s quarterly performance was solid, it might not fully satisfy bullish investors. Moore expressed concerns about the ambiguity surrounding AMD's plans to resume shipments to China, dampening prospects for AI-related growth.

Is It Time to Buy or Sell AMD Stock?

Overall, the sentiment toward AMD stock remains cautiously optimistic. Analysts collectively give it a Moderate Buy consensus, comprising 25 Buy ratings and 12 Holds. The average price target is set at $180.78, suggesting a modest 4.6% upside potential from its current levels. As the market continues to monitor AMD’s trajectory, investors are left pondering whether to seize the opportunity or tread carefully.