The subject was China.
Sure, Advanced Micro Devices (AMD) was reporting its quarterly results, but the world's second-largest economy loomed large after the chipmaker’s earnings fell short of expectations and raised concerns about the timing of a restart of shipments to China.
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The Santa Clara, Calif., company reported an $800 million charge tied to a halted shipment of AI chips to China.
“We delivered very strong second-quarter results, with revenue exceeding the midpoint of guidance, as higher EPYC and Ryzen processor sales more than offset headwinds from export controls that impacted Instinct sales,” CEO Lisa Su told analysts during the company's earnings call.
“We set records for both EPYC and Ryzen CPU sales, reflecting the broad-based demand for our differentiated high performance data center, PC and embedded processors,” she added.
AMD CEO: China is an important market
Su said data center AI business revenue declined year-over-year “as U.S. export restrictions effectively eliminated MI308 sales to China, and we began transitioning to our next-generation MI350 series accelerators.”
“Earlier this quarter, we were notified by the Department of Commerce that it is moving forward with the review of our license applications to export MI308 to China,” she said.
She referred to a custom-designed Instinct GPU developed to meet US export regulations while serving the Chinese market for high-performance AI hardware.
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“We appreciate the focus the Trump administration is placing on assuring that the U.S. technology remains central to global AI infrastructure and we expect to resume MI308 shipments as licenses are approved, subject to end-customer demand and supply-chain readiness.”
Since the licenses are still under review, Su said, the company was not including any MI308 revenue in its third-quarter outlook
“I think the focus here on ensuring that US technology gets utilized throughout the world is something that we certainly support and very much want to contribute to,” she said. “China is an important market for us. Given the timing of licenses, we have a number of licenses that are under review now.”
“We are working with the Department of Commerce to get those reviewed,” she continued. “We do expect that once those licenses are approved, we will start MI308 shipments.”
AMD shares are up 36% this year. At last check the stock was down nearly 6%.
Veteran trader: AMD balance sheet is in excellent condition
“Despite being quiet about China, CEO Lisa Su was not quiet,” The Street Pro's Stephen Guilfoyle said in his recent column.
Guilfoyle, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said that not only was guidance strong, “but it sounds like Su is intentionally being conservative.”
Cash flows are strong and getting stronger, the veteran trader said, adding that “the balance sheet is in excellent condition.”
Related: AMD earnings suggest a big problem on its hands
“The stock had been on a run,” Guilfoyle said. “I see the selloff as profit-taking, which is neither good nor bad; it is part of the natural ebb and flow of any marketplace and AMD needed to experience some consolidation.
“I am not seeing any weakness in this stock ahead of any approval of sales to Chinese customers that had previously been prohibited as an opportunity,” he added, who has a $209 price target on AMD shares.
Several investment firms issued research reports after AMD posted its results.
Analysts at Morgan Stanley said the quarter was strong across segments and revenue continues to be “quite strong, but it's not clear that will be enough to keep the bulls in charge of the narrative,” according to The Fly.
The firm, which lowered its price target on AMD to $168 from $185 and affirmed an equal-weight rating on the shares, said the timing for resuming sales to China was “more vague than expected.”
Morgan Stanley cited lower conviction in China demand and a lack of AI upside overall for the firm's lowered price target.
Northland analyst Gus Richard boosted the firm's price target on AMD to $198 from $132 and reiterated an outperform rating.
While AI revenue was hurt by export controls in the quarter, the analyst said, he expects AMD's China AI revenue to come back in calendar 2026. And he contended that the strong momentum AMD is seeing in AI is “still not reflected in consensus estimates.”
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