--- title: "Wall Street comments on AMD's earnings report: Operating expenses limit profitability, market focus shifts to AI rack scale in the second half of the year" description: "Most reports on Wall Street believe that while AMD's revenue in Q4 2025 may exceed expectations, the market's focus is on the continuously higher-than-expected operating expenses, which are seen as li" type: "news" locale: "en" url: "https://longbridge.com/en/news/274810166.md" published_at: "2026-02-04T12:13:35.000Z" --- # Wall Street comments on AMD's earnings report: Operating expenses limit profitability, market focus shifts to AI rack scale in the second half of the year > Most reports on Wall Street believe that while AMD's revenue in Q4 2025 may exceed expectations, the market's focus is on the continuously higher-than-expected operating expenses, which are seen as limiting the release of profitability. The key point shifts to whether the company can achieve market breakthroughs and operational efficiency improvements in the second half of this year with its next-generation rack-level AI products (MI455 series). Investment banks generally maintain a neutral rating, believing that although there is significant growth potential in its data center business, the company's valuation expansion will face constraints until new products are validated and lead to actual profit increases AMD's latest financial report for the fourth quarter of 2025 exceeded market expectations in terms of revenue, but the impressive numbers did not fully alleviate Wall Street's concerns. The core issue is that **the company's operating expenses exceeded expectations, continuously limiting the release of profitability, and the market is shifting its focus to whether it can achieve a breakthrough in the second half of the year with its rack-scale AI products.** According to analysis from several Wall Street investment banks, including Morgan Stanley and Goldman Sachs, AMD achieved revenue of $10.3 billion in the fourth quarter, a year-on-year increase of 34% and a quarter-on-quarter increase of 11%, significantly surpassing the market's general expectation of $9.67 billion. However, the market believes that this performance includes approximately $390 million in one-time special sales revenue, and after excluding this factor, its revenue growth is only slightly above the upper limit of the performance guidance. **The core driver of performance growth remains the data center business**, which generated revenue of $5.38 billion in the fourth quarter, a quarter-on-quarter increase of 24%. Notably, if the aforementioned one-time revenue is excluded, the quarter-on-quarter growth rate would drop to about 15%. Among them, the server CPU business, driven by AI demand, grew approximately 10% quarter-on-quarter, reaching a historical high; data center GPU revenue surged approximately 40% quarter-on-quarter to $2.75 billion, mainly benefiting from the continuous increase in production capacity of the new generation MI355X product. **Despite strong business performance, higher-than-expected operating expenses have become a common concern in reports from multiple institutions, and the market worries that this will continue to limit the improvement space for its operating leverage.** Currently, investors are looking forward to the company's management's commitment that **the rack-scale AI products, which will be ramped up in the second half of the year, can become a key catalyst for substantial improvement in profitability.** ## First Quarter Guidance Better Than Expected, But Operating Expenses Raise Concerns AMD's guidance for the first quarter of 2026 shows that **its revenue outlook is better than market consensus.** The company expects quarterly revenue of approximately $9.8 billion, higher than the market expectation of $9.4 billion, although this represents a quarter-on-quarter decline of about 5%. By business segment, the data center business is expected to achieve quarter-on-quarter growth, with server CPU revenue likely to see double-digit growth during the traditional off-season, while data center GPU revenue is expected to remain flat to slightly increase quarter-on-quarter after excluding specific factors. However, **the issue that has drawn market attention is its cost control problem.** The company's guidance for operating expenses is $3.05 billion, significantly higher than the market expectation of $2.94 billion. **This marks several consecutive quarters of operating expenses exceeding expectations.** Goldman Sachs analyst James Schneider pointed out in his report that AMD's operating expenses in the previous quarter reached $3 billion, far exceeding the previous midpoint guidance of $2.82 billion, and emphasized that the company will continue to increase investment to support its strategic investments in AI systems and software, with significant quarter-on-quarter growth in operating expenses expected in the second half of 2026 At the same time, the company's gross margin guidance, while slightly above expectations, includes approximately $100 million in sales revenue from previously reserved inventory, which somewhat undermines the "value" of this metric. ## MI455 Series Progressing as Planned, Long-term Growth Targets Unchanged Despite facing short-term operational efficiency challenges, **AMD has once again clarified its timeline and market expectations for the next-generation rack-level AI products based on the MI455 series GPUs.** The company confirmed that **this product will begin customer deliveries in the third quarter of 2026 as originally planned, with a larger revenue ramp-up expected in the fourth quarter,** refuting recent market rumors about potential delays. Management further disclosed the deployment progress of key customers, including OpenAI, which is expected to start deploying an AI computing cluster based on the MI-4XX architecture with a total capacity of 1 gigawatt (GW) in the second half of this year, while Oracle's related deployments are also confirmed to start gradually in 2026 and beyond. Based on this, the company maintains high confidence in achieving its goal of "tens of billions of dollars" in data center GPU revenue by 2027, and expects the annual growth rate of its data center business to exceed 60% over the next three to five years, driving the company's overall revenue compound annual growth rate to about 35%. Morgan Stanley analyst Joseph Moore pointed out that **despite short-term one-time factors causing disturbances, server CPUs still achieved growth in the traditional off-season, providing a positive signal for the annual performance.** He also emphasized that AMD has reached a majority share position in several major cloud computing markets, which is a structural advantage that is extremely favorable for its future competitive landscape. ## Mixed Results in Other Businesses, PC Cost Pressures Emerge The client business recorded $3.1 billion in revenue in the fourth quarter, a 13% quarter-over-quarter increase, **mainly due to improvements in the high-end product mix and market share gains. However, management holds a cautious outlook for this business in 2026, expecting the personal computer market to face rising costs of key components, which may lead to market demand in the second half of the year falling below traditional seasonal levels.** JPMorgan's global research team predicts that global PC shipments may decline by about 9% year-over-year in 2026. The gaming business generated $843 million in revenue in the fourth quarter, a significant 35% quarter-over-quarter decline, primarily because Sony and Microsoft completed concentrated stocking of semi-custom chips for consoles in the third quarter to meet holiday season demand, leading to a natural revenue drop in this quarter. With the next-generation flagship gaming consoles expected to launch in 2027, this business is anticipated to struggle for growth in 2026. **The embedded business showed signs of positive recovery in the fourth quarter,** with revenue reaching $950 million, an 11% quarter-over-quarter increase, achieving its first year-over-year positive growth since June 2023. Management expects this business to achieve growth throughout 2026, mainly driven by the near-completion of channel inventory digestion and gradually warming demand in various end markets such as industrial, automotive, and telecommunications. ## Investment Banks Maintain Cautious Stance, Valuation Already Relatively Full In response to AMD's latest performance and outlook, several major investment banks have maintained a neutral rating. Institutions have pointed out that **while AMD has growth potential, the current valuation has already reflected this, and short-term operational efficiency is a core constraint.** Deutsche Bank analyst Ross Seymore believes that the company's solid execution and long-term growth prospects are fully reflected in the current stock price. JP Morgan analyst Harlan Sur emphasized that spending issues will continue to suppress the stock price until AMD can demonstrate clear operational leverage improvements in the second half of 2026. Goldman Sachs has lowered its average earnings per share expectations for 2026-2028 by 4%, mainly because revenue growth expectations are offset by higher operating expenses; Morgan Stanley has also significantly raised its full-year operating expense expectations. The consensus among investment banks is that **AMD's position in the server CPU and client markets is solid, and the long-term potential of its data center GPU business is considerable. However, the execution risks of its upcoming rack-level AI products, potential customer concentration issues, and the visible lack of operational leverage in the short term remain major concerns for the market.** Before new products like MI450/Helios prove their market acceptance and drive profitability improvements, the company's stock price may struggle to achieve significant breakthroughs ### Related Stocks - [SMH.US - VanEck Semiconductor ETF](https://longbridge.com/en/quote/SMH.US.md) - [AMDD.US - Direxion Daily AMD Bear 1X Shares](https://longbridge.com/en/quote/AMDD.US.md) - [AMUU.US - Direxion Daily AMD Bull 2X Shares](https://longbridge.com/en/quote/AMUU.US.md) - [SOXQ.US - Invesco PHLX Semiconductor ETF](https://longbridge.com/en/quote/SOXQ.US.md) - [IGPT.US - Invesco AI and Next Gen Software ETF](https://longbridge.com/en/quote/IGPT.US.md) - [SOXL.US - Direxion Semicon Bull 3X](https://longbridge.com/en/quote/SOXL.US.md) - [AMD.US - AMD](https://longbridge.com/en/quote/AMD.US.md) - [SOXX.US - iShares Semiconductor ETF](https://longbridge.com/en/quote/SOXX.US.md) - [AMDL.US - GraniteShares 2x Long AMD Daily ETF](https://longbridge.com/en/quote/AMDL.US.md) ## Related News & Research | Title | Description | URL | |-------|-------------|-----| | OneDigital Investment Advisors LLC 增持了在 Advanced Micro Devices, Inc. $AMD 的股份 | OneDigital Investment Advisors LLC 在第三季度將其在超微半導體公司（AMD）的持股增加了 4.4%，目前持有 102,107 股，價值 1652 萬美元。其他機構投資者也增加了在 AMD 的持倉。分析師預測 | [Link](https://longbridge.com/en/news/276534286.md) | | 美股盤中速遞：AMD 漲 8.23%！與 Meta 達成千億協議，AI 芯片需求激增引發市場熱潮 | AMD 漲 8.23%；英偉達漲 0.63%，成交額達到 249 億美元；美光科技跌 0.67%，成交額達到 119 億美元；博通跌 1.96%，成交額達到 47.66 億美元；台積電漲 4.54%，市值達到 2.01 萬億美元。 | [Link](https://longbridge.com/en/news/276782244.md) | | AMD 在新的 Meta 協議中複製粘貼了 6GW 芯片換股票的交易 | AMD 與 Meta 簽署了一項重要協議，供應 6 千兆瓦的定製 Instinct GPU，這與之前與 OpenAI 的協議相似。該協議包括 AMD 第六代 EPYC CPU，並設有一種財務結構，Meta 可以根據芯片採購以折扣價購買最多 | [Link](https://longbridge.com/en/news/276764798.md) | | OpenAI 下調 2030 年算力開支目標至 6,000 億美元，回應擴張超收入擔憂 | 人工智慧公司 OpenAI 下調 2030 年算力開支目標至約 6,000 億美元，回應外界對其擴張計劃可能超出潛在收入承載能力的憂慮。OpenAI 預計 2030 年總收入將突破 2,800 億美元，調整後的開支計劃將與預期收入增長掛鈎。 | [Link](https://longbridge.com/en/news/276556885.md) | | 千億美元訂單落地！AMD 深度綁定 Meta，五年長約硬剛英偉達 | Meta 與 AMD 達成五年千億美元的戰略協議，採購 6 吉瓦算力芯片並深度定製 MI450 處理器。Meta 通過採購換取認股權證，最高或持有 AMD 10% 股份。此舉旨在通過股權捆綁保障算力供應並分散對英偉達的依賴，標誌着 AI 巨 | [Link](https://longbridge.com/en/news/276735155.md) | --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.