Advanced Micro Devices ( AMD ) stock dropped 6.08% during Wednesday pre-market after a slight miss on its second-quarter earnings per share.

Revenue Strength Driven By AI Momentum

AMD posted Q2 revenue of $5.49 billion, exceeding consensus estimates of $5.44 billion. However, EPS came in at $0.58, slightly below the forecasted $0.60.

The data center revenue stood at $3.2 billion, marking a 14% year-over-year growth, compared to Nvidia’s 73% growth in the same segment in its recent Q1 earnings release.

AMD reported a non-GAAP gross margin of 43% for the quarter. The company attributed roughly $800 million in inventory and related charges to U.S. government export restrictions on its AMD Instinct MI308 GPUs. Without these charges, gross margin would have stood at 54%.

CEO Dr. Lisa Su said the company is now "on track for a strong second half," citing “significant customer pull” for AI products.

MI355 Positioned To Challenge Nvidia's Dominance

Su also unveiled details about AMD's next-gen AI chip, the Instinct MI355, slated for a 2026 launch. The MI355 is being developed to directly compete with Nvidia's ( NVDA ) GB200 and B200, targeting customers looking for "scalable, open alternatives.”

The upcoming chip will build on the success of the MI300X and aims to offer better memory performance and energy efficiency—two key metrics in high-performance computing.

Looking Ahead

AMD reaffirmed its full-year outlook, projecting 2025 AI accelerator sales to exceed $4 billion. With strong AI tailwinds, a robust product pipeline, and expanding global presence, AMD is firmly positioning itself as Nvidia's ( NVDA ) closest rival in the AI hardware race.

Benzinga’s Edge Rankings place AMD in the 88th percentile for momentum and the 11th percentile for value, reflecting its mixed performance. Check the detailed report here. 

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.