Advanced Micro Devices (AMD +18.37%) stock advanced 16.6% through 10:10 a.m. ET Wednesday morning after beating on sales and earnings last night.
Heading into the Q1 report, analysts forecast AMD would earn $1.27 per share, pro forma, on $9.9 billion in sales. AMD actually earned $1.37 per share and sales were $10.3 billion -- and this news keeps getting better.
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AMD Q1 earnings
AMD grew sales 38% in Q1, and added three percentage points to its gross profit margin on those sales -- 53%. Operating costs grew more slowly, allowing the company to keep all three points of extra profit margin, and lifting the operating margin to 14%.
On the bottom line, AMD's earnings per share were $0.84 -- not quite as good as the pro forma profit noted above, but still a 91% improvement over Q1 2025.
As you can probably guess, it's insatiable demand for artificial intelligence chips driving demand, and CEO Dr. Lisa Su confirms that this demand is still accelerating. More granularly, demand is shifting from training large language models (LLMs) to employing these models for answering questions (i.e., "inference") and operating AI agents ("agentic AI").
This is giving AMD a chance to make up some ground lost to archrival Nvidia (NVDA +5.93%), which dominated the market when AI was still all about training.
NASDAQ: AMD
Key Data Points
What's next for AMD stock?
Su says customer demand for AMD's MI450 AI chips is strong, enabling AMD to expand its market share in an AI market that is itself "growing," "strengthening," and indeed, "exceeding expectations."
Turning to guidance, AMD now anticipates 9% sequential sales growth to $11.2 billion. Year over year, that's 46% growth -- faster than the company grew sales in Q1.
Like the CEO said -- AMD is growing, strengthening, and exceeding expectations. No wonder investors are happy.
