AMD Reports Strong Q2 Revenue Despite AI Chip Export Restrictions to China

Reviewed byNidhi Govil

19 Sources

AMD's Q2 2025 earnings report shows record revenue and strong growth, but faces challenges due to US export restrictions on AI chips to China, impacting its MI308 sales and future outlook.

AMD's Q2 2025 Financial Performance

Advanced Micro Devices (AMD) reported a strong second quarter for 2025, with revenue climbing 32% to $7.69 billion 14. This performance was driven by robust growth in client and gaming chips, as well as record server processor sales 5. The company's data center segment generated $3.2 billion in revenue, up 14% year-over-year, while the client and gaming segment saw a significant 69% increase 2.

Source: Economic Times

Source: Economic Times

Impact of US Export Restrictions on AI Chips

Despite the overall positive results, AMD faced a significant challenge due to US export restrictions on AI chips to China. The company reported an $800 million charge tied to halted shipments of its MI308 AI accelerator to China 4. This regulatory hurdle led to inventory write-downs, purchase cancellations, and the exclusion of China from AMD's revenue forecast 4.

CEO Lisa Su acknowledged the impact, stating, "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" 3. The company now estimates a $1.5-$1.8 billion revenue hit for 2025 due to these restrictions, concentrated in the second and third quarters 4.

Future Outlook and AI Strategy

Despite these challenges, AMD remains optimistic about its future in the AI market. The company forecasts third-quarter revenue of approximately $8.7 billion, above analysts' expectations of $8.3 billion 1. This guidance does not include any potential revenue from MI308 sales to China, as license applications are currently under review by the US government 13.

Source: The Motley Fool

Source: The Motley Fool

AMD is focusing on its MI350 chip, which entered volume production earlier this year and is now central to its AI strategy 4. Looking ahead to 2026, the company plans to launch its MI400 accelerator and a Helios rack-scale AI platform aimed at hyperscale customers 4.

Global Market Dynamics and Opportunities

While facing restrictions in China, AMD is exploring new opportunities in other markets. The company recently announced plans to ship AI chips to Saudi Arabia through a deal with Humain, a subsidiary of the Kingdom's Public Investment Fund 5. This move comes as the US loosened restrictions on advanced tech exports to Saudi Arabia while tightening them for China 5.

Investor Reaction and Stock Performance

Despite the strong overall performance, AMD's stock initially slumped about 5% in extended trading following the earnings report 2. Investors expressed concern about the earnings miss and the ongoing uncertainty surrounding AI chip exports to China 3. However, AMD's stock remains up over 30% year-to-date, reflecting continued investor confidence in the company's long-term prospects 4.

Source: Analytics Insight

Source: Analytics Insight

Broader Implications for the AI Chip Industry

AMD's experience highlights the growing importance of regulatory considerations in the AI chip market. The licensing process for AI chip exports has become a critical factor, potentially impacting companies' ability to compete globally 4. This situation underscores the delicate balance between technological advancement, economic interests, and national security concerns in the rapidly evolving AI industry.

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