Transcription
AMV stock is down nearly 5% after reporting earnings, and it does seem like the overall after-hour market is not doing so well.
On today's episode, I want to take a closer look at some companies that I'm personally keeping a closer eye on. And I also want to take a closer look at, obviously, AMD's earnings. So, let's take a closer look.
In today's episode, I want to thank The Motley Fool for sponsoring this video and check out fool.com/hose for the 10 best stocks to buy now. With that link, you get a promotional offer for their subscription service. Now, let's continue with today's episode.
[Music]
All right, before we look at AMD earnings, I do want to just take a closer look at the overall futures right now. It does seem like tomorrow, unfortunately, is going to be a scary red day. And that's after today. We actually experienced a nice, mild pullback on a lot of growth names. But right now, the NASDAQ is down roughly 1% on the futures. And we can also see the index for the Tokyo Stock Exchange is down roughly 4.2% right now. And it just keeps on dipping and dipping.
So, if we look at some of the overnight actions, we can see AMD is actually sitting at $238, down 4.4%. And these are actually the stocks that I'm keeping a closer eye on. I haven't decided what I'm doing, but these are the ones I'm keeping a closer eye on. I'm huge into the AI market. I think the AI market is still extremely bullish. And AMD, one that I'm keeping a closer eye on. Nvidia is in the 193s, down roughly 2.4% after hours. Coreweave is sitting at 113, down roughly 2%. Nebas is sitting at 106, down roughly 3%. Marll Technologies is sitting at 85, roughly 2.5% down. So, the overall market could get scary. Obviously, tomorrow morning, a lot can change, but these are the ones on my top watch list at the moment. Would love to hear your top watch list during this kind of downturn, but for me, it's mainly in the AI space and mainly companies that I have high understandings of.
Now, we're going to jump back to AMD, right? They just reported earnings. And let me be honest, I think earnings were pretty boring. And that's not necessarily a bad thing. I think it was boring because I didn't really learn too much new stuff. And if you have been following this channel, the story is pretty much the same. This quarter was expected to see a nice growth in the MI355, but the real story for AMD comes out next year when they release the MI400 series. And that's pretty much what's happening.
If we look at some charts here though, we can see that AMD is actually doing really good in the total client and gaming revenue. This is a record quarter for them in that segment, roughly $4.05 billion, and it was up year-over-year and sequentially. Now, usually this quarter is one of the best, and then it starts to die down, and they do expect some decline coming in the next quarter, but overall, I'm super excited by that market. The other one is data center. Data center saw a massive, massive growth. We can see $4.3 billion up sequentially and up year-over-year, obviously driven by the MI355 and by their AMD epic CPUs. The other one that I wanted to showcase was the embedded market. The embedded market is still in a pretty much down cycle. But the first thing that we are noticing is kind of like a sign that it has pretty much bottomed off, right? If it hasn't, it's near there. We see stability for the past few quarters. When this does turn around though, this becomes a massive, massive free cash flow machine for AMD. So, this is just a tailwind waiting to happen for AMD.
Now, I do have some slides and hopefully you guys do enjoy the slides. So, we're going to look at the deep dive analysis for AMD, which discusses a lot of things. But first, revenue. Revenue was $9.25 billion. This was up 36% year-over-year, and it did beat the estimates that analysts had of roughly 8.7 billion. So, that's pretty impressive. Earnings per share were $1.20, which did beat expectations by about 3% and was up 30% year-over-year. Now, quarter 4 revenue guidance was 9.6 billion and was pretty much in line with what analysts were expecting. Overall, I think the numbers were great.
Now, if we look at some of the key products, they talk about the MI355, right? So, that's the AI chip of right now. So, the CEO confirms that the MI355 ramp proceeded well in quarter 3. Growth achieved without any MI308 sales to China, making the performance notable. And that's pretty impressive, right? We saw some growth even though you're not counting the MI308s in China anymore. Oracle becomes the first hyperscaler to offer the MI355 instances, and they began ramping in a lot of NeoClouds like Cruso, Vulture, TensorWave, and the list goes on. Now, the outlook for the MI355 is the ramp is expected to continue into the first half of 2026, which is extremely bullish, right? You're going to see more growth here in this market. And that tells me that you're going to see growth in the MI355, and then in the second half, you do have the MI400.
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Now, MI400, this is where things start to get pretty exciting, right? This is when they mentioned the new platform combines their new compute engine or DNA4, I believe. Industry-leading memory and advanced networking solutions. The most important part about this is this is a rack scale integration. It's going to integrate the MI400 GPUs, the Venice Epic CPUs, the Pensando Nix in their networking solutions, and it's going to be an open rack standard. So, every time they sell this rack, they're going to make a nice amount of money. And also, after the OCP summit, which was the open compute project, they saw an acceleration of interest from numerous customers. That's super, super exciting. Launch timing, like we know it, is expected in the second half of 2026, and sovereign AI is also expected to be a nice driver with the MI430X, a variant designed for sovereign AI and scientific computing, is expected to be a seller in 2027. So, a lot of excitement in my opinion for the MI400.
Now, outside of the MI400, the client server, like we saw in the charts earlier, I don't have them right now, but the client market is still growing. Record $2.8 billion on client CPU, up 46% year-over-year. They continue to win a nice amount of market share in desktop CPU. Not only that, enterprise PC sales are up 30% year-over-year with wins in Fortune 500 companies, and they see a sharp increase in OEM sell-through of Ryzen Power notebooks for gaming and commercial. So, CPU, they are definitely doing really good in market share.
Now, in the server CPU, and this is a durable AI driver, they mentioned that AI is requiring quite a bit of general purpose compute. I do feel like it's durable. It's not a short-term thing. I think it's a multi-quarter phenomenon. This is from Dr. Lisa Su, AMD CEO. So, hyperscalers are forecasting CPU builds into 2026 driven by AI workloads. And that aligns perfectly as AMD will be releasing a new CPU, the current CPU in 2026. So, very excited for the server market, and they are definitely continuing to win some nice market share there.
Now, to me, one of the big game changers was the OpenAI partnership. Now, OpenAI, as we all know, they're expected to deploy 6 GW of AMD instant GPUs in the first, with the first gigawatt of MI450 starting in the second half of 2026. Now, Lisa mentioned the following: They expect this partnership will generate well over $100 billion in revenue over the next few years. This is described as a deep, multi-generational partnership with extremely aligned incentives where AMD, OpenAI, and shareholders win. So, I'm pretty excited. I do believe this OpenAI partnership, if it goes through, it provides a road for a trillion-dollar market cap for AMD.
Now, AMD's view on the market. New growth phase on clear trajectory towards tens of billions in annual AI revenue by 2027, most likely by 2026. Sovereign AI is gaining traction with large-scale deployments in the United States and UAE. And they're seeing strong demand for even older generations like the MI300, especially for inference workloads.
Now, the main key takeaways are the bull case. You have a lot of growth potential in server CPU that's picking up dramatically, right? The server CPU thanks to the AI story, you have the AI chips themselves, and then you also have the consumer market. Now, to be honest, the biggest bearish case is just competition and also the partnership with OpenAI. Partnership is OpenAI is partnering up with everybody. So, that could be seen of where are you in that tier list of partners? Are you on the top? Where are you on the bottom? The other thing is none of this in guidance expects bare China revenue, and that just showcases that this is a very volatile market, and you're losing billions of dollars potentially per year in that market due to regulations and uncertainty, which is limiting the total addressable market. But as a long-term investor, I would say there was nothing really here that scared me at all. I think this is one that it might pull back in the short term of things, but the long term of things, I still see the opportunity for a trillion-dollar market cap.
Now, the final thing I do want to say is Lisa was really anxious of us making sure to go to their financial analyst day on November 11th, 2025 at 1:00 p.m. Eastern time. I will most likely be covering it on this channel. So, make sure to stay tuned and again, check out whatthechipappen.com if you want to join a community of semiconductor investors. But overall for me, there's no change. If we see some pullbacks, massive, massive pullbacks, I wouldn't mind dollar cost averaging a little bit more. This is a stock we've been talking below the $100 for numerous, numerous times this year, right? We kind of just saw it in the 80s, 90s in April. Overall, the long-term thesis is still pretty much intact. So, I'm not worried at all. Take care. Have a good day.