AMD Earnings To Watch: AI Gap, CPU Battle, PC Share
Global semiconductor giant $Advanced Micro Devices(AMD)$
Option Market Signals
With AMD set to report its quarterly earnings after the bell on Tuesday, November 4th, the options market is flashing signs of extreme anticipation. The market is fully braced for a binary move, with Implied Volatility in the 90th percentile, meaning options are more expensive now than they have been 90% of the time over the past year.
However, the most compelling story is the rare volatility divergence. The stock's Historical Volatility has spiked to an eye-watering 96.23%, driven by recent sharp moves. This HV now eclipses the forward-looking IV. This configuration suggests that, as expensive as options are, the market is still struggling to price in the stock's wild, realized volatility.
Despite this turbulent backdrop, options sentiment is not defensive. A Put/Call Ratio of 0.95 shows a constructive, slightly bullish tilt. This indicates that as the stock, volatility, and open interest have all climbed, traders have been more inclined to position for upside than to pay up for downside protection.
Core Financial Indicators
Revenue: Consensus estimate is $8.74 billion, representing a 28% increase YoY and a 14% increase QoQ. Prior guidance was $8.7 billion.
GAAP Gross Margin: Consensus estimate is 51.8%, an improvement of 1.7 percentage points YoY and 12 percentage points QoQ.
Non-GAAP Gross Margin: Consensus estimate is 54%, up 0.4 percentage points YoY and 10.7 percentage points QoQ, matching prior guidance.
GAAP Net Profit: Consensus estimate is $1.22 billion, a 58% increase YoY and a 14% increase QoQ.
Non-GAAP Net Profit: Consensus estimate is $1.9 billion, a 26% increase YoY and a 143% increase QoQ. Prior guidance was $1.88 billion.
Three Things to Watch
Can the Data Center CPU Business Regain Momentum and Overtake Intel?
In Q2, AMD's Data Center revenue growth slowed to 14% YoY, largely due to a write-down of the China-specific MI308 chip. The segment was primarily salvaged by the EPYC server CPU business alone, as data center GPU sales declined significantly. AMD's overall server CPU revenue in cloud and enterprise has consistently hit new highs, with market share growing for 33 consecutive quarters, leading to expectations that AMD's Q3 Data Center revenue could surpass Intel's.
However, Intel delivered surprisingly strong Q3 Data Center results. Intel management stated that its server CPUs remain the top choice for "AI head nodes," citing strong demand for Granite Rapids. They even noted that tight capacity is being prioritized for server CPUs over the more profitable PC CPU segment. AMD's report will be crucial to determine whether this reflects an industry-wide demand surge or a shift in market share.
Can Data Center GPU Revenue Bridge the Gap Before MI450 Ships?
The Q2 decline in AMD's Data Center GPU revenue was mainly attributed to the MI308 export ban and the product transition from the MI325 series to the MI350 series. Management expects Q3 Data Center GPU revenue to grow year-over-year, benefiting from the rapid production ramp of the MI350 series. This highlights the significant impact of product cycles on AMD's GPU revenue.
AMD's current AI chip roadmap includes shipping the MI350 series in the second half of this year, the MI400 series in 2026, and the MI450 series in the second half of 2026. The 6GW order from OpenAI starts with the MI450 series, meaning it won't contribute to revenue until H2 2026. A critical question is whether AMD's Data Center GPU business can achieve a smooth transition during this interim period.
Looking at announced orders excluding OpenAI, AMD has a multi-billion dollar deal with $Oracle (ORCL.US)$ to deploy a massive cluster (MI355X + EPYC Turin + Polara 400 NIC) with an 8-9 month delivery cycle; a multi-billion dollar partnership with Humane; and a newly announced multi-hundred million dollar contract to build the Department of Energy's "Lux" supercomputer, expected to be delivered within six months.
Previously, AMD has refrained from giving full-year AI revenue guidance, stating only a long-term goal of tens of billions in annual AI revenue without a specific timeline. After securing these recent orders, investors will be watching to see if management's tone changes this quarter.
Can Laptop Share Gains Help Close the PC Revenue Gap with Intel?
AMD's Client business, driven by PCs, previously posted eight consecutive quarters of high double-digit growth, and in Q2, its PC operating margin finally surpassed Intel's.
During its Q3 earnings call, Intel noted that while it still trails AMD in the high-end desktop market, it remains strong in the consumer and enterprise laptop segments. The laptop CPU market historically accounts for 60-70% of the total PC market, which explains why AMD's revenue scale still lags significantly despite its strong desktop market share. AMD has previously stated its commercial laptop share is increasing.
$Intel(INTC)$
Summary
In summary, AMD's primary growth drivers currently remain its server CPU (EPYC) and PC businesses. The AI segment, which holds the market's focus, hinges on the execution of OpenAI orders next year. A review of AMD's stock performance on earnings days over the last 10 quarters shows it has fallen seven times.
Notably, AMD completed its divestiture of ZT Systems' data center infrastructure business to $Sanmina(SANM)$ on October 27, 2025. This transaction is expected to be recognized in Q4, contributing a $190 million gain to net profit.
@TigerStars @CaptainTiger @TigerWire @Daily_Discussion @Tiger_chat @Tiger_comments @MillionaireTiger
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
