Analysts at Wedbush and Baird welcomed Advanced Micro Devices Inc (NASDAQ:AMD, XETRA:AMD)’s fourth quarter 2025 results as solid, but flagged caveats which may have contributed to a sharp post-earnings sell-off.
Wedbush said AMD delivered “positive results, albeit also not as positive as the print looked,” noting that much of the data center upside came from MI308 sales to China, which suggested “more muted growth for AI silicon net this one-time benefit.”
The firm also highlighted that gross margins of 57% beat consensus of 54.5%, though part of the upside was tied to previously written-off MI308 inventories.
Wedbush also noted AMD’s first-quarter guidance exceeded prior revenue expectations by $300 million and 50 basis points, but $100 million of that came again from MI308 shipments to China.
“Even without the benefit of being able to write up inventory, AMD’s outlook in particular was better than consensus expectations,” the analysts wrote, adding that tight server CPU supply and AMD’s superior product profile “should yield both pricing and mix benefits that likely boost sales and GMs over at least the next few quarters.”
Wedbush reiterated its ‘Outperform’ rating with a $290 price target, citing management’s confidence in achieving revenue growth above 35% over the next three to five years.
“While we continue to have less visibility into AMD's AI ramp, we still believe they are best positioned to offer a comparable 2nd source vs. NVDA and we also have no concrete data points that would cause us to doubt management's optimistic outlook around future prospects,” they wrote.
Baird also emphasized strong underlying performance, noting that AMD is “navigating supply constraints well so far” and has “strong design win momentum.”
The firm highlighted that hyperscaler AI-related demand remains robust and MI450 shipments are on track to begin in Q3 2026, with meaningful volume expected in q4 2026.
Baird also pointed to AMD securing $17 billion in design wins in 2025, up nearly 20% year-over-year, and said initial demand for server CPU Venice is “very strong.”
Baird's analysts reiterated their price target of $300 but lowered its suitability rating to Higher Risk from Speculative “to reflect the company's well-entrenched traction in AI with a broad based set of hardware products, ramping software platforms, and multiple tier-one customer engagements.”
Despite these fundamentals, AMD shares fell more than 17% to about $201 in after-hours trading. Wedbush attributed the sell-off in part to the “growing shortages of CPUs seemingly creating more opportunity to extract incremental value that wasn’t apparent in results or guidance.” Baird noted that broader market considerations and pricing pressure in the PC segment due to inflationary commodity costs could also be weighing on the stock.