Summary
Advanced Micro Devices (NASDAQ:AMD) stock declined roughly 8% in after-hours trading following the company’s fourth quarter 2025 earnings release, despite reporting a modest beat and raising guidance. Market commentary cited mixed investor sentiment, with particular scrutiny on the nature of a China-related sales contribution and the company’s exposure to the OpenAI project. Management maintained that MI450 development is on track and that the business is adding new customers for the product.
Market reaction and valuation context
Shares were trading at $242.11 with a market capitalization of $394.17 billion at the quoted price. The share price has shown elevated volatility, reflected in a beta of 1.95 according to InvestingPro data. AMD’s price-earnings ratio stands at 126.66, and the company is expected to remain profitable during the year.
Investor concerns highlighted by Raymond James
Raymond James documented mixed sentiment among investors after the report. Some market participants focused on AMD’s outsized reliance on the OpenAI project and raised the possibility of supply or commitment risk tied to that relationship. Concerns were also voiced about potential bottlenecks in ramping the MI450, though management responded by confirming the accelerator was progressing and attracting additional customers.
The investment firm also called attention to the composition of the sales beat. A $390 million contribution from Chinese sales was not included in guidance and accounted for more than half of the $600 million beat versus expectations. That detail led some investors to characterize the beat as "low-quality," even as company management and Raymond James noted that excluding China, sales were still at the high end of guidance.
Margins and guidance
Even when excluding the China-related sales, the company’s gross margin would have been near 55%, which is above the consensus figure cited of 54.5%. Management guided first quarter 2026 gross margin to approximately 55%, a touch below Raymond James’ estimate of 55.7%.
There was apparent market confusion around operating expense guidance for Q1 2026. Management stated a forecast of $3.05 billion in operating expenses for the quarter; Raymond James noted that some analysts may have misheard that as $3.5 billion. Management confirmed the $3.05 billion figure and clarified that operating expenses for 2026 are expected to grow more slowly than sales.
Revenue growth and analyst targets
InvestingPro data shows AMD’s revenue expanded 31.83% over the last twelve months. Analyst price targets cited in market commentary range from $210 to $380, indicating a view that the stock is trading slightly above its estimated fair value. For the upcoming quarter, management offered guidance of $9.8 billion in revenue, slightly above the $9.4 billion consensus estimate.
Brokerage views and price-target moves
Several brokerages issued or reiterated ratings and price targets following the results. Mizuho adjusted its price target to $275 and maintained an Outperform rating, citing higher expenses. Northland reiterated an Outperform rating and pointed to momentum in AMD’s AI and PC businesses. Rosenblatt Securities continues to carry a Buy rating with a $300 target, attributing its stance to strong data center demand and share gains. Evercore ISI increased its price target to $328, noting data center growth despite the recent pullback in shares. BofA Securities raised its price target to $280, framing AMD as a principal competitor to Nvidia in the AI GPU market.
Research resources
For investors seeking deeper analysis, a comprehensive Pro Research Report on AMD is available on InvestingPro. That report is accompanied by 18 ProTips and more than 50 financial metrics intended to provide additional context for semiconductor industry investments.
Takeaway
AMD’s latest quarter delivered a modest beat and raised near-term guidance, but investor focus on the composition of the sales beat, dependence on key customers like OpenAI, and the trajectory for margins and the MI450 ramp helped drive an after-hours share-price decline. Management has reiterated the MI450 is on track and confirmed operating expense guidance for the first quarter of 2026.
Note: This article reports on the company’s published results, guidance, and analyst commentary without additional interpretation beyond the information provided by management and the referenced broker notes.