AMD Reports Strong Growth Amid Trade Concerns

AMD has revealed impressive earnings growth of 36%, indicating a potential resurgence in its competitiveness against Nvidia. However, ongoing trade conflicts, particularly with China, and high valuations remain critical concerns for investors.

Date: 15-05-2025

AI Rating: 7

AMD’s Earnings Report: In its first-quarter earnings, AMD demonstrated a noteworthy revenue growth of 36% year-over-year, reaching $7.4 billion, which exceeded analyst expectations of $7.1 billion. This surge represents the company's fastest growth rate since 2022. The company's data center segment was a significant contributor, showcasing a remarkable 57% growth, driven by demand for its Instinct chips. This revenue boost is crucial as it positions AMD as a competitive player against Nvidia, which historically dominated this market.

Concerns and Risks: Despite strong earnings, there are concerns that could hinder AMD’s stock performance. The trade war between the U.S. and China is anticipated to result in AMD missing out on approximately $1.5 billion in potential revenue due to U.S. export restrictions on China. The evolving nature of these trade discussions adds uncertainty to AMD’s future performance.

Additionally, AMD's current valuation, sitting at 75 times its trailing earnings, could deter risk-averse investors. While its forward P/E ratio of 25 becomes a more appealing prospect when considering analysts' future earnings expectations, it still lags behind Nvidia's forward P/E of around 27. This could raise questions regarding AMD's relative attractiveness to investors, as Nvidia commands a better position in the lucrative AI chip market.

A recent stock price increase following earnings release could indicate investor optimism; however, the broader context of trade risks and valuation concerns will be critical in shaping AMD's stock trajectory in the months ahead.

Stocks: AMD NVDA