$Advanced Micro Devices(AMD)$ is set to report its Q2 2025 earnings on 29 July , and analysts are indeed eyeing this as a potential catalyst for the stock.
The consensus EPS estimate is $0.54, which reflects a 21.7% YoY decline, likely due to macro headwinds and export restrictions to China that could weigh on results.
In this article, I will be sharing the breakdown of such a setup and also what we as investors could watch out to take advantage, and I will be also sharing on how I would be using my barbell approach for such a setup.
I have a long-term holding on AMD, which the upcoming earnings I believe would be an important milestone for AMD.
Here is a quick breakdown of the setup
What Is Priced In
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Stock is down ~18% YTD, suggesting some pessimism is already baked in.
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AI momentum remains a long-term tailwind, especially in data center and inference workloads.
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Valuation is still rich compared to peers, so the bar for upside surprise is high.
What to Watch in the Earnings
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Data Center and AI Group growth: Any upside here could reignite bullish sentiment.
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China exposure: Management commentary on export restrictions will be key.
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Gross margin trends: A beat here could signal better-than-expected pricing power.
Strategic Angle
Using my barbell approach and interest in asymmetric setups, i would be considering:
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Scaling in pre-earnings with a partial position, then reassessing post-call.
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Using options overlays (e.g., call spreads or protective puts) to manage event risk.
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Pairing AMD with a defensive yield sleeve to balance volatility.
In the following section, I will be sharing a quick return cone simulation or a technical setup overlay to refine our entry timing.
Return Cone Simulation (July–December 2025)
Interpretation: The base case implies a ~28% upside by year-end, assuming earnings meet expectations and AI tailwinds persist. The bullish cone reflects upside from a strong MI300 ramp and easing China export concerns. The bearish cone prices in margin compression or a weak data center print.
Technical Setup Overlay (as of early July 2025)
Here is a snapshot of AMD’s current technical posture:
Price Action: Trading near $137, below the 50-day MA ($128) — suggesting a neutral-to-bullish bias.
RSI: Hovering around 52 — no overbought/oversold signal, but room to run.
MACD: Bullish crossover forming, with histogram turning positive — early momentum signal.
Bollinger Bands: Price is consolidating near the mid-band, with narrowing bands — a volatility squeeze setup.
Fibonacci Levels (from May high to June low):
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38.2% retrace: $140 (resistance)
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61.8% retrace: $147 (breakout trigger)
Tactical Entry Ideas:
Aggressive: Enter now with a tight stop below $132 (recent support).
Measured: Wait for a breakout above $140 with volume confirmation.
Options Overlay: Consider a July–August call spread (e.g., $140/$160) to express upside while capping risk.
In the next section, I will be sharing my barbell allocation simulation that balances AMD’s high-torque growth potential with the stability and yield of midstream energy and dividend aristocrats.
Barbell Allocation: July 2025 Simulation
High-Torque Growth Sleeve: AMD Focus
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Weight: 40%
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Instruments: AMD equity + July–August call spreads (e.g., $140/$160)
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Risk Overlay: Protective puts or collars around earnings
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Expected Yield: ~0% (growth-focused)
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Volatility: High
Defensive Yield Sleeve 1: Midstream Energy (30%)
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Top Picks: Enterprise Products Partners (EPD) – 6.8% yield, 28-year dividend streak MPLX LP – 7.5% yield, strong Permian exposure Energy Transfer (ET) – 7.2% yield, LNG and data center tailwinds
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Expected Yield: 6.5–7.5%
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Volatility: Low-to-moderate
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Macro Fit: Natural gas demand, AI-driven power needs, inflation hedge
Defensive Yield Sleeve 2: Dividend Aristocrats (30%)
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Top Picks: PepsiCo (PEP) – 2.9% yield, 51-year streak, consumer staples ballast $Johnson & Johnson(JNJ)$ – 3.1% yield, healthcare anchor Realty Income (O) – 5.5% yield, monthly payer, REIT stability
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Expected Yield: 3.5–4.5%
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Volatility: Low
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Macro Fit: Recession-resilient sectors, consistent dividend growth
Portfolio Metrics (Simulated)
How do AMD’s competitors compare ahead of earnings?
In the following section I will be sizing up AMD’s key rivals $NVIDIA(NVDA)$ , $Intel(INTC)$ , and $Qualcomm(QCOM)$ as we head into earnings season. Each brings a different flavor of risk/reward to the table:
NVIDIA (NVDA)
Next Earnings: August 27, 2025
Consensus EPS: $0.99 (+45.6% YoY)
Valuation: Forward P/E ~57.8; PEG ~1.31 — richly priced, but with explosive growth
Tailwinds: Dominant in AI training and inference (Blackwell ramp is historic) Q1 revenue hit $44.1B (+69% YoY), driven by data center demand
Risks:
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High expectations baked in — any miss could trigger a sharp pullback
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Regulatory scrutiny and export controls remain overhangs
Positioning: NVIDIA is the AI kingpin. If AMD surprises to the upside, it could narrow the sentiment gap — but NVDA remains the benchmark for AI compute.
Intel (INTC)
Next Earnings: July 24, 2025
Consensus EPS: $0.01 (flat YoY)
Valuation: Forward P/E ~40.6; still in turnaround mode
Tailwinds: Aggressive restructuring and cost-cutting under new CEO Foundry ambitions could pay off long-term
Risks:
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Revenue guidance ($11.2B–$12.4B) is below consensus
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Still losing share in data center and AI accelerators
Positioning: Intel is the contrarian value play. It’s not a direct AI peer to AMD/NVDA yet, but its July print could set a tone for legacy CPU demand.
Qualcomm (QCOM)
Next Earnings: July 30, 2025
Consensus EPS: $2.68 (+15% YoY)
Valuation: Forward P/E ~16.3 — relatively cheap
Tailwinds: Strong handset rebound and RF front-end demand Expanding into automotive and edge AI
Risks:
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Smartphone cycle still lumpy
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Licensing revenue under pressure from regulatory shifts
Positioning: Qualcomm is more of a connectivity and edge AI play. It’s not a direct comp to AMD’s data center push, but it offers diversification within the semi barbell.
What do the Bollinger Bands indicate for AMD's price movement?
As of early July 2025, AMD’s Bollinger Bands are signaling a potentially pivotal setup:
Current Bollinger Band Snapshot
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Price: ~$134.80 (as of July 7)
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20-day SMA (middle band): ~$135.25
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Upper Band: ~$139.70
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Lower Band: ~$129.90
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Band Width: Narrowing — indicating a volatility squeeze
Interpretation
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Price near mid-band: Suggests consolidation — neither strongly bullish nor bearish.
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Narrowing bands: Often precede a breakout. The direction is not guaranteed, but it implies a larger move is brewing.
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Volume uptick on down day: May hint at short-term caution, though the broader trend remains intact.
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MACD crossover and RSI ~52: Reinforce a neutral-to-bullish bias.
Tactical Implications For My Strategy
Given my technical fluency and barbell strategy, I will be doing the following:
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Watch for a breakout above $140 with volume — that would confirm upside momentum.
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Break below $129 could trigger a retest of the 200-day MA (~$128).
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Options angle: A straddle or strangle could capitalize on the expected volatility expansion.
In the next section, I will be layering in the Fibonacci confluence zones and simulate how a breakout could reshape your AMD sleeve within the barbell.
Fibonacci Confluence Zones (as of July 2025)
Using the May high ($122), we identify key retracement levels:
Interpretation: The $140–$148 range is a Fibonacci confluence cluster , a high-probability breakout zone. A decisive move above $148 could trigger momentum toward $174+.
Breakout Simulation: Impact on AMD Sleeve
I will show how I would simulate two breakout paths and how they affect the 40% AMD sleeve in the barbell:
Scenario A: Bullish Breakout to $174 by October
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AMD Return: +29% from $134.80 to $174
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AMD Sleeve Impact: +11.6% contribution to total portfolio
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Barbell Portfolio Return: ~+7.2% (assuming 4.5% from yield sleeves)
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Tactical Move: Consider rolling call spreads higher (e.g., $160/$180) to capture extended upside
Scenario B: False Breakout, Pullback to $122
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AMD Return: –9.5%
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AMD Sleeve Impact: –3.8%
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Barbell Portfolio Return: ~+0.6% (yield sleeves buffer downside)
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Tactical Move: Add protective puts or reduce AMD sleeve to 30% temporarily
Strategic Takeaways
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Breakout above $148 with volume = green light to scale AMD sleeve to 45%
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Failure at $140 = maintain current 40% weight with options hedge
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Confluence + Bollinger squeeze = volatility expansion likely imminent
What Defensive Sectors Pair Well With This AMD Strategy?
Since my AMD sleeve is torque-heavy and earnings-sensitive. To balance that, I would want sectors with low beta, durable cash flows, and macro resilience.
Below is a curated list of defensive sectors that pair well with my AMD-centric barbell:
Healthcare
Why it works: Non-cyclical demand, aging demographics, and pricing power.
Top picks:
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Johnson & Johnson (JNJ) – Healthcare anchor with dividend growth
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UnitedHealth Group (UNH) – Managed care with scale and margin stability
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AbbVie (ABBV) – Strong pipeline and high dividend yield
Consumer Staples
Why it works: Recession-resistant, pricing power in inflationary environments.
Top picks:
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PepsiCo (PEP) – Global brand, 51-year dividend streak
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Procter & Gamble (PG) – Household essentials with pricing agility
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Costco (COST) – Defensive retail with membership-driven loyalty
Utilities
Why it works: Regulated cash flows, high dividend yields, low correlation to tech.
Top picks:
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$NextEra(NEE)$ – Clean energy exposure + utility stability
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Duke Energy (DUK) – Southeast U.S. grid dominance
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Dominion Energy (D) – Defensive yield with infrastructure upside
REITs (Selective)
Why it works: Income generation, inflation hedging, and sector-specific resilience.
Top picks:
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Realty Income (O) – Monthly dividends, retail REIT with long leases
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Public Storage (PSA) – Self-storage demand is recession-resistant
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Welltower (WELL) – Healthcare REIT with aging population tailwinds
Midstream Energy (already in your sleeve)
Why it works: Toll-road model, inflation-linked contracts, AI-driven power demand.
Top picks:
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Enterprise Products Partners (EPD)
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MPLX LP
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Energy Transfer (ET)
Strategic Pairing Tips
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AMD + Healthcare: Balances innovation with demographic-driven stability.
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AMD + Staples/Utilities: Dampens volatility while preserving yield.
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AMD + REITs: Adds real asset exposure and inflation protection.
What Are Some Effective Options Strategies For Earnings?
I will be simulating a bullish call spread on AMD ahead of earnings and overlay it with the expected move and IV crush dynamics for July 2025.
Strategy: Bullish Call Spread (July 25 Expiration)
Rationale: This structure expresses upside conviction while capping risk. It benefits from a move above $151.50 by expiration.
Overlay: Expected Move & IV Crush
Expected Move (July 25 Expiration)
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Stock Price: ~$134.80
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Implied Move: ±$15.20 (≈11.3%)
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Range: $119.60 to $150.00
Implication: Your long call at $150 sits right at the upper bound of the expected move — a breakout beyond this could trigger full profit.
IV Crush Scenario
Pre-Earnings IV: ~66%
Post-Earnings IV: ~45% (historical average drop)
Impact:
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Long Call loses value from IV drop
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Short Call also loses value — partially offsets
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Net Effect: IV crush is less damaging in a spread than in a naked long call
Scenario Simulation
Strategic Fit for Your Barbell
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Risk-defined: Aligns with your asymmetric setup preference
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IV-aware: Mitigates crush via spread structure
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Torque-balanced: Pairs well with your midstream and dividend sleeves
In the next section I will be starting with a neutral straddle and then a post-earnings drift play, so we can compare how each aligns with our asymmetric strategy and volatility expectations.
Strategy 1: Neutral Straddle (July 29 Expiration)
Overlay: Expected Move & IV Crush
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Implied Move: ±$15.20 (~11.3%) → Range: $119.60 to $150.00
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IV Crush Risk: High — both legs lose value if AMD trades flat post-earnings
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Profit Zone: Needs a large move beyond breakevens to overcome premium
Best Use: If you expect a big surprise (up or down) and want to capture the volatility expansion — but be mindful of the IV crush risk if the move is muted.
Strategy 2: Post-Earnings Drift Play (Directional Call Spread)
Rationale
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Timing: Enter after earnings, once direction is confirmed
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Drift Capture: AMD historically trends for 5–10 days post-beat
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IV Advantage: Lower IV post-earnings = cheaper premium
Best Use: If AMD beats and guides strong, this lets you ride the momentum drift without paying inflated pre-earnings premiums.
Strategic Fit for Your Barbell
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Straddle = High torque, high risk — best if you expect fireworks
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Drift Play = Cleaner asymmetric setup — aligns with your macro-responsive sleeve and lets you scale exposure post-confirmation
In this final section I will be bringing a full circle with a payoff curve comparison and a backtest of AMD’s post-earnings drift to sharpen my entry and exit timing.
Payoff Curve Comparison: Straddle vs. Drift Call Spread
Takeaway: The straddle is ideal if you expect a surprise and want to capture the full volatility burst. The drift spread is better if you prefer confirmation and want to ride the post-earnings trend with lower IV exposure.
AMD Post-Earnings Drift Backtest (2023–2025)
Here is how AMD has historically behaved after earnings over the past 10 quarters:
Drift Probability: In 3 of the last 5 beats, AMD showed double-digit upside drift over the following 1–2 weeks, especially when the beat was paired with strong guidance.
Strategic Timing Insight
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Pre-Earnings: Use straddles or call spreads if you expect a surprise and want to capture the move.
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Post-Earnings: If AMD beats and guides strong, consider entering a drift call spread 1–2 days after the print to ride the momentum.
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IV Advantage: Post-earnings spreads are cheaper due to IV crush — ideal for asymmetric setups.
Summary
It might be a good time to consider buying more AMD stock due to its upcoming Q2 earnings report, anticipated as a key catalyst. Analysts are increasingly optimistic, upgrading ratings and raising price targets following AMD's recent AI event.
Key reasons include:
AI Leadership: The upcoming MI400 series is seen as a pivotal development in AI and GPU technology, offering competitive advantages over rivals like NVIDIA with better cost-to-performance and memory capacity for large AI workloads.
Market Share Gains: Analysts expect AMD to gain market share, driven by a strong product pipeline and recent partnerships with major companies such as Oracle, Meta Platforms, and OpenAI.
Accelerated Growth: The Q2 earnings report is projected to show accelerated growth, and positive guidance could further propel the stock to new highs, affirming analyst confidence in AMD's strategic direction and execution.
I will be working on my barbell strategy to take advantage of any potential entry point before AMD’s upcoming earnings.
Appreciate if you could share your thoughts in the comment section whether you think AMD can be considered and monitored for an entry before its upcoming earnings.
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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