AMD (NASDAQ:AMD) Underperforms Chip Stocks by 7.7 Points Despite Record Quarter

NEW YORK, August 9, 2026, 15:15 EDT —

Advanced Micro Devices NASDAQ:AMD ended Friday trading at $483.36, declining 1.21%. U.S. markets did not open on Sunday. Shares were 6.79% lower compared to Tuesday’s close.

AMD advanced 1.51% compared with the previous Friday. After a 7.00% surge on Tuesday, Wednesday’s session wiped out those gains, resulting in a round trip through the week.

Session	Close	Daily move
Friday, July 31	$476.15	−1.90%
Monday, August 3	$484.64	+1.78%
Tuesday, August 4	$518.58	+7.00%
Wednesday, August 5	$482.05	−7.04%
Thursday, August 6	$489.28	+1.50%
Friday, August 7	$483.36	−1.21%

The PHLX Semiconductor Index advanced 9.24% over the week. With AMD rising 1.51%, the difference stood at 7.73 percentage points. This difference points to a reassessment of expectations unique to the company, instead of a broader sector decline.

Quarterly results surpassed Wall Street’s visible expectations. Second-quarter revenue topped LSEG consensus estimates by 2.3%, and adjusted earnings exceeded projections by 2.5%. The midpoint of Q3 revenue guidance was 3.8% ahead of consensus. However, that did not suffice.

Measure	AMD figure	Consensus	Difference
Q2 revenue	$11.54 billion	$11.28 billion	+2.3%
Q2 adjusted EPS	$1.66	$1.62	+2.5%
Q2 Data Center revenue	$6.72 billion	$6.48 billion	+3.7%
Q3 revenue midpoint	$13.00 billion	$12.52 billion	+3.8%

Nvidia NASDAQ:NVDA continues to be AMD’s chief competitor in AI accelerators. Bernstein analyst Stacy Rasgon stated, “We suspect expectations had moved higher, and the buyside already has a fairly bullish outlook.” Reuters

The income breakdown accounts for this high threshold. Data Center produced $2.103 billion in operating income, making up 105.7% of AMD’s total $1.990 billion. Calculations indicate that some segment profit was offset by unassigned expenses.

Business	Q2 revenue	Revenue change	Q2 operating income	Q2 2025 operating income
Data Center	$6.718 billion	+107%	$2.103 billion	−$155 million
Client and Gaming	$3.841 billion	+6%	$582 million	$767 million
Embedded	$977 million	+19%	$386 million	$275 million
All Other	—	—	−$1.081 billion	−$1.021 billion
Total	$11.536 billion	+50%	$1.990 billion	−$134 million

The comparison is notably influenced by a significant base effect. Second quarter 2025 results reflected $800 million in inventory and related charges associated with U.S. export restrictions on MI308 GPUs.

Chief Executive Lisa Su stated, “We enter the second half with strong momentum as EPYC demand accelerates, Instinct deployments scale and Helios begins to ramp.” AMD earnings release

On Thursday, AMD announced an agreement to acquire Taalas, a Toronto startup focused on designing custom silicon for AI inference, the process that executes trained AI models. AMD intends to incorporate Taalas’ solutions into its Instinct GPUs. The companies did not reveal the financial details of the deal.

Wall Street remained generally positive, but reactions varied. Some analysts, including Morgan Stanley, set a $465 target, which is under Friday’s close, while two others predicted targets of $700. The spreads referenced below reflect $483.36.

Date	Firm	Rating	Old target	New target	Vs. Friday close
Aug. 6	Argus	Buy	$450	$625	+29.3%
Aug. 5	Rosenblatt	Buy	$665	$700	+44.8%
Aug. 5	Wells Fargo	Overweight	$615	$700	+44.8%
Aug. 5	Mizuho	Outperform	$625	$580	+20.0%
Aug. 5	JPMorgan	Neutral	$385	$550	+13.8%
Aug. 5	Morgan Stanley	Equalweight	$410	$465	−3.8%

AMD’s main risk lies in its supply obligations. The company reported $30.3 billion in unconditional commitments, with $17.4 billion due through the rest of 2026. These are not capital expenditures but relate to supply, cloud services, software, and licenses. A slower rollout could result in surplus inventory or idle capacity.

AMD is set to appear next on Tuesday during KeyBanc’s Technology Leadership Forum. The live webcast begins at 9:30 a.m. MDT, or 11:30 a.m. EDT. AMD has not revealed which subjects will be discussed.

Macro risks are looming. July consumer price figures are due on Wednesday at 8:30 a.m. EDT, with producer price data set for release Thursday at the same hour. Stronger-than-expected results could push up yields and weigh on semiconductor stocks.

TS2 TECH • EXTENDED COVERAGE

Further analysis

Editorial insight

What caused AMD shares to drop following its record-high quarterly revenue?

AMD (NASDAQ:AMD) ended trading on Friday at $483.36, marking a 6.8% fall from its close ahead of Tuesday's results. Second-quarter revenue exceeded the consensus estimate by approximately 2.0%. Adjusted EPS outpaced expectations by about 2.5%, and third-quarter guidance came in 3.8% higher than LSEG’s forecast. The upside surprises were positive, but not large. In the week through August 7, AMD advanced 1.5%, while the Philadelphia Semiconductor Index climbed 9.2%, putting AMD 7.7 percentage points behind the sector index.

Is the bulk of AMD’s growth now being driven by its data-center business?

Data Center revenue totaled $6.718 billion, marking a 107% increase year-over-year. This division accounted for 58% of AMD’s overall sales and generated $2.103 billion in segment operating income. Client revenue increased by 23%, and Embedded revenue grew 19%. Gaming revenue declined by 31%. Expansion remains robust, with momentum increasingly reliant on data center performance.

What does AMD need to achieve in the third quarter?

Management forecasts revenue to be around $13.0 billion, with a possible fluctuation of $300 million. The midpoint marks a 41% year-on-year rise and a 13% increase from the prior quarter. AMD needs to generate approximately $1.464 billion more in quarterly sales and maintain an adjusted gross margin close to 56%. This will be the next challenge.

Did the record revenue result in matching cash flow performance?

No. Free cash flow in Q2 dropped by 39% quarter-on-quarter to $1.558 billion. The margin decreased to 14% from 25%, as operating cash flow slipped and capital expenditures doubled. Profit growth from a year earlier also faced a low baseline. Q2 2025 results factored in an $800 million charge related to export controls. Adjusted for this, EPS rose by approximately 82%, rather than the headline 246% increase.

What are the expenses and shareholder dilution associated with AMD’s AI expansion?

AMD granted OpenAI and Meta conditional warrants that could cover as many as 160 million shares each, representing a combined peak of roughly 19.6% of outstanding shares. As of June 27, none of the warrants had vested or become exercisable. The full dilution is subject to strict conditions and should not be seen as guaranteed. AMD also disclosed $30.3 billion in unconditional commitments, with $17.4 billion due through the remainder of fiscal 2026. These commitments do not count as outstanding debt, but slower demand would make meeting them more challenging.

How does the Taalas acquisition impact things now?

Few models are feasible at present. On August 6, AMD announced an agreement to buy Taalas and merge its inference technology with Instinct and Helios platforms. No details were given by AMD about purchase price, closing timeline or forecast revenue gains. The acquisition could boost inference offerings in the long run, but immediate financial effects are not specified.