AMD Stock Slides After Solid Earnings Report -- Barrons.com
Dow Jones2026/08/04 20:57By Adam Levine
Advanced Micro Devices reported solid but unspectacular second-quarter earnings results on Tuesday afternoon. Its shares were down sharply in after-hours trading. The stock had been up 7% during the regular trading session.
AMD's revenue in the latest quarter reached $11.5 billion, above expectations of $11.3 billion, and up 50% on the year.
Adjusted earnings per share were $1.66, up from 48 cents last year, and just ahead of Wall Street's projection of $1.62. Last year, earnings were impacted by an $800 million charge for inventory that had been destined for Chinese sales that were canceled by shifting U.S. export control policy.
Adjusted operating income reached $3.1 billion, with a 27% operating margin, just above the Wall Street consensus estimate.
In the all-important data center segment, sales were $6.7 billion, ahead of projections of $6.3 billion and up 107%, with a 31% operating margin. Revenue from PC and gaming chips was up 6%, but operating margin in that unit got slammed, down to 15% from 21% a year ago.
The company will offer more complete guidance during the earnings call, but AMD's outlook for third-quarter revenue and adjusted gross margin in the earnings release edged expectations.
The market's reaction to earnings is another chapter in an eventful year for AMD stock. From March 30 to June 30 the stock was up 196%; it then declined 26% through July 29.
AMD had long been the second choice for CPU chips behind Intel, while its GPUs were No. 2 to Nvidia. AMD's server CPUs are now considered by many to be better than Intel's, and the company claims to have a 40% market share, on the road to 50%.
By 2030, it expects those CPUs to be a $220 billion a year market, thanks to renewed interest in CPU servers this year as part of the full AI data-center picture. Its competitors -- Intel, Arm, Nvidia, and Amazon -- have also indicated skyrocketing demand.
At the beginning of the AI data center boom, AMD was way behind Nvidia, and it still is. But the company's recent Advancing AI conference showed off how far it had come in matching Nvidia's Vera Rubin AI server technologically. The new AMD Helios servers combine AMD GPUs, CPUs, and networking chips, supported by maturing software. AMD is chipping away at Nvidia's moat, by using its rival's holistic approach of "extreme co-design" in the AI data center.
Helios will begin shipping to its first two big customers, Meta Platforms and OpenAI, by the end of the current quarter. Underlining AMD's second-place status, both of them received warrants for 160 million AMD shares, which vest in tranches as deliveries are made. If all the shares vest, they would represent about 16% of AMD's diluted share count.
(Nvidia, by contrast, is getting shares of its customers' stock in some deals.)
Microsoft, Oracle, and Anthropic have also agreed to buy Helios servers. There were no warrants issued as part of these deals.
Because of the Helios schedule, analysts are expecting a sales inflection in the fourth quarter into 2027. Next year, AMD's sales are expected to grow by 59% to $80 billion with earnings surging by more than 80% to $13.87.
Write to Adam Levine at adam.levine@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
August 04, 2026 16:57 ET (20:57 GMT)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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