Advanced Micro Devices (AMD) is set to report its first-quarter 2025 results after the market closes on May 6, and all eyes are on the company’s data center segment-a key growth engine that could determine the stock’s next move.
Data Center Growth:
Analysts expect AMD’s Q1 revenue to rise about 30% year-over-year to around $7.1–$7.13 billion, with earnings per share jumping 52% to $0.94. The data center business, which now accounts for over half of AMD’s total revenue, is projected to be the main driver.
This segment has been fueled by strong demand for AMD’s EPYC CPUs and Instinct AI accelerators, with major cloud and enterprise customers increasing their deployments. Recent momentum includes the $4.9 billion acquisition of ZT Systems, aimed at accelerating AMD’s presence in hyperscale server and AI infrastructure markets.
What Could Move the Stock
- Positive Surprise: If AMD’s data center revenues meet or exceed the high expectations, and management delivers upbeat guidance for the rest of 2025, the stock could see a meaningful rally. Investors are especially focused on updates about AI chip adoption, new hyperscale wins, and integration progress with ZT Systems.
- Risks: However, the bar is high. Last quarter, data center sales missed consensus, leading to a 6% drop in AMD shares. Investors remain sensitive to any sign of weakness, especially with ongoing U.S. export restrictions to China, integration costs from the ZT acquisition, and continued softness in the gaming and embedded segments.
Analyst Sentiment and Valuation
Wall Street’s outlook is cautiously optimistic. While some analysts have recently trimmed price targets due to macro risks, the consensus target remains well above current trading levels, and several major firms rate AMD a “buy.”
The company trades at a premium to peers, reflecting high expectations for its AI and data center growth.
Technical and Market Context
Despite robust revenue growth, AMD’s stock has underperformed the broader semiconductor sector over the past year, reflecting both execution risk and stiff competition in the AI computing space.
The share price has rebounded from recent lows, but a sustained rally will likely require a clear beat-and-raise quarter, particularly in the data center segment.