AMD Q3 Preview: Can the AI Rally Keep Its Power?

Advanced Micro Devices, Inc. AMD reports its third-quarter 2025 results after the market closes on November 4. Street estimates call for earnings per share of $1.17 and revenue of $8.8 billion, implying a 28% YoY increase on both the top and bottom lines. After a difficult 2024, the company has had an incredible comeback. Its shares have more than doubled so far this year, and in just the past month, they're up nearly 60%, reflecting growing investor conviction that AMD is among the biggest beneficiaries of the artificial intelligence boom.

In the previous quarter, AMD reported $7.7 billion in revenue. Despite both GAAP gross and operating margins being down sharply YoY, net income rose more than 229%, mainly due to a tax benefit. However, it is worth noting that the margin pressure was mainly driven by the U.S. government's export controls, which led to roughly $800 million in inventory and related charges. Excluding these items, non-GAAP gross margin would have been about 54%.

What sets this quarter apart is the ramp-up of AMD's Instinct MI350 AI accelerator series and continued share gains in EPYC server CPUs and Ryzen client processors. Investors will focus on three main themes. First, the data-center AI engine. How quickly MI350 deployments are scaling, how AMD's performance stacks up against Nvidia NVDA in hyperscale clusters, and whether export restrictions begin to ease. Second, the PC and gaming recovery. Whether Ryzen and Radeon demand can reestablish margin momentum. Third, overall margin trajectory and cash-flow discipline, which remain key to sustaining the rally.

With shares trading at 41x forward earnings, expectations are already high. This quarter needs to deliver on every front. Any sign of slower demand, weaker guidance, or hesitation on AI momentum could quickly test the stock's momentum.