Chip Stocks Stumble: Are AMD and SMCI Oversold or Too Risky to Touch?

The Q2 2025 earnings season has been a wild ride for chip stocks, with Advanced Micro Devices ( $Advanced Micro Devices(AMD)$ ) and Super Micro Computer ( $SUPER MICRO COMPUTER INC(SMCI)$ ) taking hits after missing profit expectations. AMD reported a revenue beat but fell short on adjusted EPS, dragged down by a hefty inventory charge, while SMCI’s shares plunged 16% after missing both revenue and profit targets and issuing weak guidance. With the broader chip sector facing post-earnings sell-offs, investors are asking: are AMD and SMCI oversold and ripe for a rebound, or should they be avoided for now? And is NVIDIA, with its consistent beats, the only chip stock worth buying? This deep dive explores their earnings, market reactions, technical indicators, and strategic investment approaches to navigate this volatile landscape.

AMD’s Q2 2025 Earnings: Revenue Beat, Profit Miss

AMD reported its Q2 2025 earnings on August 5, 2025, delivering a mixed performance:

• Revenue: $7.7 billion, up 32% year-over-year, beating consensus estimates of $7.43 billion, per Yahoo Finance.

• Adjusted EPS: $0.48, missing the $0.49 forecast, impacted by an $800 million inventory charge due to U.S. export controls on MI308 GPUs to China, per StockTitan.

• Key Segments:

  Data Center: $3.2 billion, up 14% YoY, driven by Instinct GPUs and EPYC CPUs.

  Client and Gaming: $3.6 billion, up 69% YoY, boosted by Ryzen processors.

• Q3 Guidance: Revenue expected at $8.4-$9 billion (midpoint $8.7 billion), above consensus of $8.5 billion, with non-GAAP gross margin at 54%.

• Stock Reaction: Shares dipped ~3% in after-hours trading to $157, down from a 52-week high of $188.75, reflecting investor concerns over the EPS miss and margin pressure.

CEO Lisa Su emphasized, “Our Q2 results highlight strong AI and data center demand, despite export challenges,” per AMD’s earnings release. The $800 million charge, reducing gross margin to 43% (vs. 54% ex-charge), underscores the impact of China restrictions, which could shave $1.5 billion off 2025 revenue, per Investopedia.

SMCI’s Q2 2025 Earnings: A Double Miss

Super Micro Computer reported preliminary Q2 2025 results on February 11, 2025, missing expectations:

• Revenue: $5.6-$5.7 billion, below the $6.1 billion consensus, though up 54% YoY, per StockTitan.

• Adjusted EPS: Not explicitly reported, but implied weaker than expected due to a 220 basis point drop in gross margin to 9.7%, driven by inventory write-downs and supply chain costs, per Yahoo Finance.

• Q3 Guidance: Revenue projected at $5.6-$6.4 billion, below consensus of $6.5 billion, with non-GAAP EPS of $0.40-$0.50, per Investing.com.

• Key Notes: Strong AI server demand (70%+ of revenue from GPU platforms) was offset by governance issues, including Ernst & Young’s resignation as auditor and accusations of accounting irregularities, per CNBC.

• Stock Reaction: Shares plunged 16% to ~$90 in after-hours trading, down from a 2025 high of $122.90, reflecting investor disappointment.

CEO Charles Liang noted, “We’re expanding global manufacturing to meet AI demand, but supply chain transitions impacted margins,” per Yahoo Finance. Ongoing governance concerns and tariff risks (30% on EU/Mexico, 35% on Canada, effective August 1) add pressure.

Are AMD and SMCI Oversold?

AMD: Approaching Oversold

• Technical Indicators: At $157, AMD is above its 50-day moving average ($155) but down from its 52-week high of $188.75. Its RSI of 68 is not yet oversold (below 30), but a further dip could push it closer, per TradingView.

• Fundamentals: AMD’s 32% revenue growth and diversified portfolio (data center, client, gaming) support long-term upside. The MI300X GPU and EPYC CPUs compete with NVIDIA and Intel, with partnerships like Meta and Amazon boosting credibility, per AMD’s earnings release.

• Risks: The $800 million China-related charge and a projected $1.5 billion 2025 revenue hit raise concerns. The forward P/E of 252x demands sustained growth, per Nasdaq.

• Outlook: It seems likely that AMD’s decline may continue to $150-$155 (support levels) if sentiment remains cautious, but its AI and data center strength could limit downside. A rebound to $170-$180 is possible if Q3 guidance or crypto market trends (e.g., Bitcoin at $119,000) boost sentiment.

SMCI: Deeply Oversold but Risky

• Technical Indicators: At ~$90, SMCI is well below its 50-day moving average ($100) and 2025 high of $122.90. Its RSI of ~30 indicates oversold conditions, per TradingView, suggesting a potential bounce.

• Fundamentals: SMCI’s 54% revenue growth and leadership in AI servers (70%+ of revenue from GPU platforms) are strong, but governance issues and a 220 basis point margin drop erode confidence, per Yahoo Finance.

• Risks: Ongoing auditor issues, accusations of accounting irregularities, and tariff impacts (potentially raising costs by 10-15%) make SMCI riskier, per CNBC. The Q3 guidance miss signals near-term challenges.

• Outlook: SMCI’s oversold status makes it tempting for aggressive traders, but governance and tariff risks suggest avoiding it until clarity emerges, likely post-Q3 earnings in November 2025.

Is NVIDIA the Only Chip Stock to Buy?

NVIDIA reported Q2 2025 earnings on August 21, 2025, with:

• Revenue: $10.4 billion, beating estimates of $10.35 billion, per CNBC.

• Adjusted EPS: $2.77, surpassing $2.71 expectations.

• Stock Reaction: Shares rose ~5% post-earnings to $177, reflecting strong investor confidence.

• Strengths: NVIDIA’s dominance in AI GPUs (H100, Blackwell series) and partnerships with Microsoft, Meta, and Amazon drive growth. Its forward P/E of 50x is high but justified by 409% data center growth, per AMD’s earnings call.

• Risks: China export restrictions ($5-7 billion quarterly hit) and competition from AMD’s MI350 and Intel’s Gaudi 3 pose challenges, per Investopedia.

While NVIDIA is the safest chip stock due to its consistent beats and AI leadership, AMD’s diversified portfolio (CPUs, GPUs, client) and SMCI’s AI server role offer potential for patient investors. NVIDIA’s premium valuation requires careful entry timing, but its market position makes it the top choice for stability.

Trading and Investment Strategies

Short-Term Plays

• AMD Buy on Dip: Enter at $150-$155, target $170-$180, stop at $145. A 10-15% gain if Q3 guidance or crypto trends lift sentiment.

• AMD Options Straddle: Buy $157 calls/puts (September expiry) for volatility, targeting 200-300% gains on a 10%+ move.

• SMCI Scalp: Buy at $85-$90 if RSI drops below 30, target $100-$105, stop at $80. A 10-17% gain for aggressive traders, but high risk.

• NVDA Buy on Dip: Enter at $165-$170, target $200-$220, stop at $160. A 13-20% gain if AI demand holds.

Long-Term Investments

• Hold AMD: Buy at $150-$155, target $200-$250 by 2026, for 28-61% upside with AI and data center growth.

• Hold NVDA: Buy at $165-$170, target $240-$320 by 2030, for 33-78% upside with AI dominance.

• Avoid SMCI: Wait for governance clarity and Q3 earnings before considering a long-term position.

• Diversify with XLK ETF: Buy at $200, target $220, stop at $190, for tech exposure.

Hedge Strategies

• VIXY ETF: Buy at $15, target $18, stop at $13, to hedge tariff or market volatility.

• SPY ETF Puts: Use puts at $614 to protect against a 5-10% S&P 500 pullback.

• Gold ETF (GLD): Buy at $200, target $220, stop at $190, as a safe-haven hedge.

My Trading Plan

I’m cautiously optimistic about AMD, seeing $150-$155 as a safer entry for long-term investors, targeting $170-$180, with a $145 stop, and using a $157 call/put straddle for volatility. I’ll avoid SMCI due to governance risks, waiting for Q3 earnings clarity. For NVIDIA, I’ll buy at $165-$170, targeting $200-$220, with a $160 stop, betting on AI leadership. I’ll diversify with XLK at $200, targeting $220, with a $190 stop, and hedge with VIXY at $15, targeting $18, keeping 20% cash for dips if tariffs, geopolitical tensions (Israel-Iran conflict), or weak economic data escalate. I’ll monitor AMD’s Q3 guidance, SMCI’s governance updates, and tariff developments for cues.

Key Metrics

The Bigger Picture

AMD and SMCI’s Q2 2025 earnings misses highlight the chip sector’s volatility, with AMD’s profit shortfall and SMCI’s revenue and guidance disappointments driving sharp declines. AMD’s AI and data center growth make it a potential oversold buy at $150-$155, but SMCI’s governance issues and tariff risks suggest avoiding it for now. NVIDIA’s consistent beats and AI dominance position it as the safest chip stock, though its premium valuation requires careful timing. With August’s historical volatility (7-10% pullback risk), tariffs, and geopolitical tensions, investors should buy AMD and NVIDIA on dips, avoid SMCI until clarity emerges, and hedge with VIXY or GLD to manage risks. The chip sector’s rally is shaky—play it smart to seize the upside.

Are you buying AMD or SMCI on the dip, or sticking with NVIDIA? Share your strategy below! 🎁

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📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

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