AMD stock falls 4% despite 107% data center revenue growth

AMD’s data-center revenue surged 107% year-over-year in the second quarter, sending the chipmaker’s quarterly sales past Wall Street’s highest forecasts. Yet the stock tumbled on the news, dropping more than 4% in after-hours trading. The disconnect highlights how investors now judge AMD’s growth against expectations rather than raw results.

The jump in data-center sales—up from 57% last quarter—reflects AMD’s rapid expansion in cloud and AI servers. Analysts note that last year’s U.S. ban on chip sales to China made this year’s growth look stronger by comparison. Even so, AMD’s 16% sequential increase outpaced Nvidia’s 92% year-over-year gain, though Nvidia’s revenue rose 21% from the prior quarter, suggesting the race remains tight. AMD’s operating margin improved to 17%, a sharp turnaround from a 2% loss a year ago, signaling better profitability as demand for AI chips grows.

Despite the stellar numbers, AMD’s stock sold off because the market had already priced in most of the upside. Shares were trading near 70 times forward earnings and 37 times 2027 estimates before the report, leaving little room for further surprises. Investors had bet big on AMD’s ability to chip away at Nvidia’s lead in AI chips, and the latest results, while strong, didn’t meet the lofty bar set by those expectations.

What happens next depends on whether AMD can keep up the momentum. The company is expected to launch new AI chips later this year, which could either solidify its gains or fall short of the hype. If margins continue to improve and revenue growth stays above 100%, the stock may stabilize. But if the market feels the rally has run its course, AMD could face more pressure—even with record sales.