Advanced Micro Devices (AMD) Pre-earnings Analysis

Advanced Micro Devices (AMD) Pre-earnings Analysis

AMD is up more than 100% this year as it becomes the second golden child of the artificial intelligence boom after Nvidia. The company has seen record revenue growth, major AI partnerships, and expansion into data centers in the past 12 months, making it one of the hottest stocks on the market. But as shares hover near record highs, many investors are nervous about whether or not the company can meet earnings expectations.

The quarterly earnings report is set for November 4th after market close and expectations are high. Revenue is forecast to grow about 28% from a year ago and earnings per shares by 30-35%. If AMD can meet these expectations, that would mark remarkable growth and perhaps fuel the stock even higher. 

In the works:

AMD has a huge year lined up for 2025 as it goes all in on AI and high performance chips. The company struck a major deal with OpenAI to supply up to 6 gigawatts of GPUs for future data centers, and OpenAI even plans to buy 10% of AMD’s stock. Oracle also signed on for up to 50,000 GPUs to power its global cloud services. AMD’s hardware will run new U.S. Department of Energy supercomputers, and on the consumer side, the company is rolling out Ryzen AI Max and Ryzen 9000 desktop processors, next-gen Radeon GPUs, and new Threadripper chips for power users. Their MI350 AI accelerators start ramping later in 2025, with the MI400 series already announced for 2026 and targeting a 10x jump in AI performance. On top of that, AMD secured a $10 billion AI infrastructure partnership with Saudi Arabia’s HUMAIN and is making strategic acquisitions to boost its edge computing and AI inference capabilities.

All these projects are filling up AMD’s backlog and reinforcing revenue growth for the next 3-4 years, but the company must affirm these projections to really keep investors interested at these highs. Plus, AMD must provide a path to strong profit margins to alleviate its expensive price to earnings ratio of 122x. 

China export risks:

China remains a massive market opportunity for both AMD and Nvidia, but they now have to play within tighter U.S. export rules that limit how powerful their AI chips can be. These restrictions have already slowed down shipments across the industry and could cap how much business the companies can do in one of the largest tech markets in the world. AMD says its guidance already accounts for the impact, but investors will be looking for clarity on whether modified, China compliant chips can help recapture demand. It’s not a deal-breaker for the long term AI story, but it’s definitely a headwind both companies are forced to navigate.

At $411 billion, AMD is still one of the cheapest semiconductor stocks on the market by market cap. Names like Broadcom and Nvidia are worth trillions of dollars, making AMD a high quality name that’s discounted compared to peers. However investors must note that AMD’s revenue is not as strong as its competitors, but it is climbing. So while the AI boom seems to be hitting a bump in the road right now, if confidence is restored on earnings, AMD may be set for further highs. 

Option chain analysis:

Looking at its option chain, $AMD’s November 21st expiration currently reflects an implied volatility reading of 74%, which translates to about a (+/-) $32 move from the underlying stock by expiration. The direction largely depends on the outcome of their earnings and what’s said on the call.