Advanced Micro Devices (AMD) is recognized for providing some of the leading semiconductors globally, including a burgeoning selection of chips tailored for artificial intelligence (AI) workloads utilized in data centers and personal computers. The company has scheduled the release of its first-quarter financial results for 2025 on May 6. Investors are anticipating updates on the company’s advancements and potentially an updated forecast from CEO Lisa Su concerning AI chip sales for the year 2025.
As of now, AMD’s stock is trading at 54% below its all-time high from 2024. A portion of this decline followed the imposition of broad tariffs by President Donald Trump on April 2, affecting America’s trading partners. This drop in stock price might present an attractive valuation for investors considering whether to invest before the financial report on May 6.
In its pursuit to match Nvidia’s offerings in the data center sector, AMD introduced the MI300X AI graphics processing unit (GPU) in late 2023, targeting data centers. This development appealed to several prominent AI developers like Meta Platforms, Microsoft, and Oracle, delivering enhanced performance and reduced costs compared to Nvidia’s then-leading H100 processor. AMD’s subsequent release of the more advanced MI325X and preparation to ship the MI350 series, which is founded on the new GPU architecture called CDNA 4, promises a performance boost of 35 times over the MI300X. This progression is set to rival Nvidia’s Blackwell architecture, the current industry standard.
AMD initiated sending MI350 samples to customers in the first quarter of 2025, with production expected to increase toward mid-year. The series is projected to be AMD’s most popular data center GPU lineup thus far, equipped to support the development of some of the most sophisticated AI models to date. Oracle’s recent announcement of building a cluster of 30,000 MI355X GPUs may signal similar actions from other customers. Investors anticipate receiving an update on production and demand during AMD’s financial report release on May 6.
AMD entered 2025 with considerable momentum in its data center segment, having generated $25.8 billion in total revenue during 2024, which marks a 14% rise compared to the previous year. Specifically, the company’s data center revenue surged by 94% to a record high of $12.6 billion. GPU sales comprised $5 billion of this figure, and Su forecasts this will expand into the tens of billions over the forthcoming years. An update to this forecast may be revealed on May 6, as numerous customers have sampled the MI350 series GPUs recently.
The company’s client segment, which includes the Ryzen AI chips for personal computers, generated $7 billion, reflecting a 52% year-on-year growth. These chips enable powerful local AI applications without an internet connection, enhancing user speed and experience. However, AMD’s gaming and embedded segments struggled in 2024, contributing to the decline in stock value. Gaming revenue dropped by 58%, although a recovery is possible with the release of the anticipated Radeon 9070 GPU. The embedded segment experienced a 33% revenue decrease due to weak demand in main markets like communications and industrials.
There are expectations for AMD to rebound its gaming and embedded segments’ growth in 2025 and maintain robust progress in its AI ventures, potentially paving the way for a record year.
Similar to Nvidia and many formidable industry entities, AMD depends on Taiwan Semiconductor Manufacturing for producing a significant share of its chips. President Trump’s recent implementation of a 10% tariff on U.S. imports and a specific 32% “reciprocal” tariff on Taiwan has been temporarily paused for 90 days. Despite semiconductors being exempted, the tariffs still have implications for numerous AMD customers, potentially limiting their AI infrastructure investments. This might cause Su to restrain from elevating her GPU sales forecast for 2025 when AMD unveils its results on May 6, posing a crucial risk to the stock.
Nonetheless, Trump’s utilization of such tariffs is not unprecedented. His past imposition of tariffs in 2018 led to a roughly 20% reduction in the S&P 500, though the market and broader economy rebounded subsequently.
Investors might consider focusing on AMD’s long-term prospects on May 6, particularly in light of the current stock price. AMD trades at a price-to-earnings (P/E) ratio of 28.2, representing a 31% discount relative to Nvidia’s P/E ratio of 37.1. Based on Wall Street’s anticipated earnings-per-share for 2025, AMD’s stock holds a forward P/E ratio of 20.1, suggesting it would need to appreciate by 40% by year’s end to sustain its present P/E ratio.
While volatility surrounding AMD’s forthcoming financial report could occur, contingent on Su’s commentary regarding AI demand, investors with a long-term outlook of three to five years might find purchasing the stock at its current rate rewarding.
