Semiconductor giant Advanced Micro Devices (NASDAQ: AMD) delivered better-than-expected earnings for the first quarter of 2025, driven by surging demand in its data center and artificial intelligence divisions.
The company reported revenue of $7.44 billion, marking a 36% increase year-over-year, and significantly beating Wall Street expectations.
The upbeat report sent AMD’s shares climbing more than 4% in after-hours trading on Tuesday, signaling renewed investor confidence after a rocky start to the year.
A Strong Quarter Across Core Segments
AMD’s performance in the data center market was a standout, generating $3.7 billion in revenue—an increase of 57% from a year earlier.
Executives attributed the growth to strong demand for the company’s EPYC™ server processors and Instinct™ MI300X AI accelerators, which are increasingly being adopted by major cloud providers and enterprise customers.
“Our data center business delivered record revenue as customers continue to choose AMD for high-performance and energy-efficient computing,” said Dr. Lisa Su, AMD Chair and CEO, during the company’s earnings call.
“We are executing well against our roadmap and expanding our footprint in the most critical markets of the future.”
The client computing division also posted a remarkable 68% jump in revenue, reaching $2.3 billion, boosted by strong adoption of the company’s latest “Zen 5” Ryzen™ processors for desktops and laptops.
However, not all areas were firing on all cylinders. The gaming segment saw a 30% decline year-over-year, largely due to weaker demand for semi-custom products used in gaming consoles. Meanwhile, embedded solutions fell slightly by 3%, generating $823 million.
Investor Reaction and Stock Performance
Markets responded positively to the earnings report. Shares of AMD closed the regular session at $99.13 before climbing to $103.25 in extended trading. While the stock is still down roughly 18% year-to-date, analysts described the quarterly report as a “turning point.”
“AMD’s results highlight its resilience and ability to capitalize on high-growth sectors such as AI and cloud infrastructure,” said Daniel White, an analyst at MorningStar.
“This could mark the beginning of a broader recovery in semiconductor equities, especially for players aggressively pursuing AI applications.”
Outlook: A Calculated Path Forward
Looking ahead, AMD forecast second-quarter revenue of approximately $7.4 billion, plus or minus $300 million. The company warned, however, that non-GAAP gross margins are expected to narrow to 43%, reflecting an $800 million charge tied to U.S. export restrictions on chip sales to China.
Still, AMD remains bullish on its long-term prospects. The company recently completed its acquisition of server manufacturer ZT Systems, which is expected to further enhance its reach in the enterprise market.
Additionally, AMD is accelerating development on its next-gen Instinct MI350 GPU series, slated for release later this year, as it looks to challenge Nvidia’s dominance in AI acceleration.
A Growing Force in the Chip Wars
While Nvidia continues to lead in the AI GPU market with an estimated 80% share, AMD is gaining ground. Market research from TrendForce estimates AMD’s share of the global x86 server CPU market reached nearly 20% in Q1 2025, up from just 10% three years ago.
In AI-specific workloads, AMD is projected to capture over 10% market share by the end of the year, up from less than 5% in 2023.
“AMD’s rapid innovation and aggressive expansion strategy are starting to pay dividends,” said Sabrina Lin, a semiconductor industry analyst at Gartner.
“If the company can continue executing on both hardware and software fronts, it will become a far more formidable competitor in the AI era.”
With strong earnings, growing market share, and a deepening focus on AI and data center technologies, AMD is clearly positioning itself as a next-generation leader in high-performance computing.
However, the company must navigate geopolitical risks, regulatory hurdles, and fierce competition as it seeks to sustain its momentum in 2025 and beyond.
As investors recalibrate their outlooks, AMD’s latest earnings may well mark the start of a new chapter for the chipmaker—one where it plays a central role in shaping the future of global computing infrastructure.
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