AMD Gears Up to Report Q4 Earnings: Here's Why the Stock is a Buy

Advanced Micro Devices AMD is set to release its fourth-quarter 2025 results on Feb. 3.AMD expects fourth-quarter 2025 revenues of $9.6 billion (+/-$300 million). At the mid-point of the revenue range, this represents year-over-year growth of 25% and sequential growth of roughly 4%.The Zacks Consensus Estimate for AMD’s fourth-quarter revenues is pegged at $9.67 billion, suggesting year-over-year growth of 26.2%. The consensus mark for fourth-quarter 2025 earnings is pegged at $1.33 per share, unchanged over the past 30 days. The earnings estimate indicates growth of 22% on a year-over-year basis.Consensus Estimate Trend Image Source: Zacks Investment Research AMD beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average surprise being 2.45%. Advanced Micro Devices, Inc. Price and EPS Surprise Advanced Micro Devices, Inc. price-eps-surprise | Advanced Micro Devices, Inc. Quote Let’s see how things have shaped up for the upcoming earnings announcement.Factors to Note Ahead of AMD’s Q4 ResultsThe mid-point of AMD’s fourth-quarter guidance reflects strong double-digit growth in Data Center and the Client and Gaming segment, and a return to growth in the Embedded segment. On a sequential basis, AMD’s top-line is expected to benefit from double-digit growth in the DataCenter segment with strong growth in server and continued ramp of the company’s MI350 Series GPUs. The Embedded segment is also expected to grow double-digit, while the Client and Gaming segment is anticipated to see client revenues increasing but gaming declining double-digit.AMD’s fourth-quarter 2025 performance is expected to have benefited from continued strong demand for its EPYC processors and Instinct accelerators. AMD’s to-be-reported quarter results are expected to have benefited from a rich partner base that includes the likes of OpenAI, Cohere, IBM, Oracle ORCL, Google, HPE, Dell Technologies, Lenovo, Super Micro and others.In the third quarter of 2025, Oracle became the first hyperscaler to publicly offer MI355X instances, delivering significantly higher performance for real-time inference and multimodal training workloads on Oracle Cloud Infrastructure (OCI)’s zettascale supercluster. OCI will launch the first publicly available AI supercluster using AMD’s Helios rack design. The MI350 series has gained traction among neocloud providers, including Crusoe, DigitalOcean, TensorWave and Vultr, among others. The MI300 series is gaining rapid adoption among developers. New partners like Character.AI and Luma AI are now running production workloads on the MI300 Series.However, AMD continues to face stiff competition from NVIDIA NVDA and a resurgent Intel INTC. NVIDIA is benefiting from the strong growth of its newer Hopper and Blackwell GPU platforms. Intel is undertaking various strategic decisions to gain a firmer footing in the expansive AI sector. Capital infusion by Softbank, NVIDIA and direct funding from the U.S. Department of Commerce are likely to pave the way for innovation and growth.AMD Stock Outperforms Sector, Lags IndustryAdvanced Micro Devices shares have surged 112.6% in a year, outperforming the Zacks Computer and Technology sector’s return of 27.6% but lagging the Zacks Computer–Integrated Systems industry’s appreciation of 114.7%. The company’s shares have underperformed Intel but outperformed NVIDIA in the trailing 12-month period. Shares of Intel and NVIDIA have appreciated 143.8% and 53.6%, respectively.AMD’s Share Price Performance Image Source: Zacks Investment Research The AMD stock is not so cheap, as its Value Score of F suggests a stretched valuation at this moment.In terms of the forward 12-month price/sales, Advanced Micro Devices is currently trading at 7.03X, higher than the industry’s 4.2X and Intel’s 4.05X.AMD Stock’s Valuation Image Source: Zacks Investment Research AMD Rides on Strong Portfolio Amid Stiff CompetitionAMD’s prospect rides on its “AI Everywhere, for Everyone” strategy. The introduction of the Helios rack-scale platform, Instinct MI400 series lineup and Ryzen AI 400 and AI PRO 400 Series processors for AI PCs are noteworthy developments in this regard. In her CES 2026 keynote, CEO Lisa Su highlighted AMD’s expanding AI portfolio and rich partner base, which is translating AI innovation into real-world impact, from data centers to edge devices. Su emphasized the rapid shift toward “yotta-scale computing,” with global compute capacity projected to grow from about 100 zettaflops currently to more than 10 yottaflops (one yottaflop is equivalent to a computer performing one septillion calculations per second) within five years. AMD’s Helios rack-scale platform is suitable for handling yotta-scale AI infrastructure. A single Helios rack can deliver up to 3 AI exaflops and is optimized for massive, energy-efficient training of trillion-parameter models. Helios comprises Instinct MI455X accelerators, EPYC “Venice” CPUs and Pensando “Vulcano” NICs for scale-out networking and the open AMD ROCm software ecosystem.AMD envisions the data center total addressable market to hit $1 trillion by 2030, suggesting a CAGR of more than 40% from roughly $200 billion estimated in 2025. AMD expects its data center AI revenues to see a CAGR of more than 80% over the next 3-5 years, driven by strong demand for instinct GPUs (MI450 Series and Helios rack-scale solutions) and expanding clientele that includes multiple hyperscalers, as well as sovereign opportunities. Overall data center business revenues and total revenues are expected to see a CAGR of more than 60% and greater than 35%, respectively, over the same time frame.ConclusionAMD’s expanding portfolio and rich partner base are expected to have improved its top-line growth in the to-be-reported quarter. Despite stiff competition and stretched valuation, AMD benefits from strong demand for its EPYC chip and Instinct accelerators. This makes the stock attractive for investorsAMD currently has a Zacks Rank #2 (Buy) and a Growth Score of B, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Beyond Nvidia: AI's Second Wave Is HereThe AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. Little-known AI firms tackling the world's biggest problems may be more lucrative in the coming months and years.SeeWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Intel Corporation (INTC): Free Stock Analysis Report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Oracle Corporation (ORCL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks