AMD’s Q2 2025 consensus EPS estimate is currently lower than expected, but the full picture is more complex than it appears. Please note that this article is not intended as investment advice, and the author does not hold any positions in the mentioned stocks.
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AMD is facing margin pressures due to new U.S. licensing regulations concerning the MI308 GPUs, which are specific to China. This situation has led to expected charges in Q2, as outlined by AMD’s own guidance. For context, AMD announced during its Q1 2025 earnings report that it anticipates $800 million in charges for MI308 inventory write-offs, purchase commitments, and reserves related to the ongoing quarter.
Additionally, AMD has projected that its Q2 gross margin will drop to 43%, compared to the expected 54% if the MI308-related charges were not factored in. These charges are considered one-time expenses, and generally, analysts tend to exclude such atypical costs when making their projections.
However, according to KeyBanc analyst John Vinh, most Wall Street analysts have included these charges in their consensus estimates for AMD’s Q2, which has led to a revised earnings estimate. Vinh explained, “Our prior estimate excluded these charges given their one-time nature; however, to align with the Street consensus, we’ve now included them. Therefore, we’ve reduced our Q2 2025 EPS estimate to $0.47 from $0.90, compared to the consensus of $0.57.”
This adjustment has caused AMD’s Q2 EPS estimate to dip, suggesting some concerns that these charges may not be entirely one-off. At the same time, recent comments from Kevin Hassett, Director of the National Economic Council, hinted at the possibility of the U.S. easing certain China-specific chip export restrictions as part of a larger trade negotiation. However, Hassett quickly dismissed any easing for NVIDIA’s H20 GPU, implying that restrictions on AMD’s MI308 GPUs will likely continue.
Ultimately, a clearer picture of AMD’s financial landscape will only emerge once the U.S. and China finalize their trade deal.
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