Should You Buy Advanced Micro Devices (AMD) Stock Before Aug. 5?

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In essence, the semiconductor sector serves as the core driving force behind the rapid advancement of Artificial Intelligence (AI). It’s hard to imagine creating sophisticated AI software without the multitude of Graphics Processing Units (GPUs) housed in every AI-focused data center.

As an onlooker, I’ve noticed that Advanced Micro Devices (AMD) has ascended to the position of a leading GPU supplier. Interestingly, it also offers top-tier AI processors for personal computers. This could signify a significant growth sector as more artificial intelligence tasks migrate towards devices, enhancing user convenience.

AMD is set to disclose its second-quarter 2025 financial results (which ended on June 30) on August 5. The management’s predictions indicate another robust performance, and it’s expected that CEO Lisa Su will provide investors with an update on the company’s advancements in its most recent hardware products, such as the MI355X and MI400 data center GPUs.

Considering AMD’s stock has surged by 30% so far this year, is it advisable for investors to purchase it before the forthcoming report, or have the positive prospects been factored into the current price?

AMD is chasing Nvidia in the data center space

In 2023, Nvidia’s (NVDA) H100 GPU was the most sought-after data center chip for AI tasks, securing a dominant 98% market share. AMD entered the scene later, unveiling its rival product, the MI300X GPU, in December of that year. Remarkably, AMD managed to win over significant clients from Nvidia, including Oracle, Meta Platforms, and Microsoft.

Nvidia maintains its lead in innovation after unveiling the Blackwell GPU architecture in 2024 and Blackwell Ultra this year. However, AMD is narrowing the gap with its brand-new CDNA (Compute DNA) 4 architecture, boasting a power roughly 35 times greater than its previous version. This technological advancement underpins new GPUs such as the MI355X, now available to customers. For example, Oracle has placed an order for over 130,000 of these units.

In 2026, both Nvidia and AMD are expected to take their competition to the next level with brand-new lines of graphics processing units (GPUs). Specifically, Nvidia is set to debut its Rubin chips, while AMD will unveil its MI400 Series. Preliminary information suggests that these two platforms might deliver comparable performance, potentially marking a significant milestone where AMD matches or surpasses Nvidia technologically. Su should provide an update on the MI400 on August 5.

As an enthusiast, I can’t help but highlight the intrigue that the upcoming Ryzen AI 300 series of chips for personal computers holds. These chips are packed with a built-in Graphics Processing Unit (GPU), Central Processing Unit (CPU), and Neural Processing Unit (NPU) to create leading-edge AI processors. Already, industry titans such as Asus, HP Inc., and Dell have shown interest, signaling a promising future for these chips. So, investors, don’t forget to monitor updates on this exciting development outside the traditional data center realm!

Progress in computer chip technology allows for AI tasks to increasingly be handled directly on the device, eliminating the need for queries to be sent to remote data centers. This leads to a swifter user experience and enables popular AI applications to function offline, even without an internet connection, thereby enhancing accessibility.

AMD’s AI revenue likely soared again in Q2

In the first quarter of 2025 (ending March 31), AMD earned approximately $7.4 billion, marking a significant 36% rise compared to the same period the previous year. This figure comprises $3.7 billion from their data center division, showing a striking 57% growth due to robust GPU sales. Additionally, the client segment, where AMD’s Ryzen AI chips are sold, reported an impressive 68% increase, bringing in approximately $2.3 billion.

AMD estimates its Q2 total revenue to fall within a range of $7.1 billion to $7.7 billion, signifying a potential 32% increase year-over-year at the upper limit of this range. However, due to the U.S. government’s recent restrictions on chip exports to China, the company anticipates a decline of approximately $700 million in revenue. Consequently, AMD’s results would have been even stronger without these restrictions.

AMD did not provide a particular forecast for their data center or client segments for the second quarter, but given that these two sectors make up 81% of the company’s total income, they are expected to continue being the primary contributors to its growth. However, the smaller gaming and embedded segments might pose challenges to the business once more.

AMD provides chips for gaming consoles such as Sony’s PlayStation 5 and Microsoft’s Xbox, which have been experiencing a consistent drop in sales. Meanwhile, their embedded business develops chips for industrial uses, and its earnings have decreased during recent periods; however, AMD anticipates a resurgence of growth in the second part of this year.

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Should you buy AMD stock before Aug. 5?

It’s highly unlikely that one quarter will alter AMD’s favorable long-term course in the AI hardware market. However, given its 30% year-to-date growth, the stock isn’t currently affordable for some investors. Whether to buy it before its upcoming earnings report may hinge on an investor’s time frame.

According to AMD’s reported earnings (excluding certain items), they earned $3.66 per share. This means their stock price is approximately 43.1 times that earnings figure. Compared to Nvidia’s stock, which is trading at around 53.7 times its earnings, AMD appears cheaper. However, it’s important to note that Nvidia’s business is expanding at a quicker rate, explaining why investors are willing to pay a higher price for their shares.

Investors seeking immediate high returns from AMD shares may find themselves underwhelmed in the coming months. However, Wall Street’s collective forecast (as reported by Yahoo! Finance) anticipates that AMD’s non-GAAP earnings per share will expand to approximately $5.71 by 2026. This gives the stock a forward price-to-earnings ratio of only 27.6, indicating there’s potential for substantial growth. Thus, investors who are prepared to hold onto AMD shares for the next 18 months could potentially reap significant benefits if they purchase them now.

Investing in AMD stocks for a duration of at least five years could potentially yield the most favorable outcomes. This is due to the fact that this extended period allows the company to fully capitalize on the value generated from its AI chip sales across data center and PC markets, ultimately leading to maximized returns for investors.

Briefly, if you’re a short-term investor, it might not be wise to heavily invest in AMD stock before August 5th. However, for investors with a long-term perspective, there’s a potential for significant profits by purchasing AMD stocks right now.

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2025-07-24 12:37