Why AMD’s Earnings Miss Is Irrelevant – The Real Game-Changer Just Dropped

AMD stumbles on earnings? Wall Street panics. But here's the twist – the numbers don't tell the full story.

Beneath the surface, something bigger is brewing.

The chip war just got a silent upgrade

While analysts hyperventilate over short-term margins, AMD's quietly stacking dominoes in AI infrastructure. Their next-gen architecture isn't just competing – it's rewriting the rules.

Institutional money's betting on the wrong horse

Classic finance move: obsessing over quarterly reports while missing tectonic shifts. Meanwhile, crypto miners are already repurposing AMD rigs for neural net training – talk about unintended consequences.

This isn't about beating estimates. It's about owning the silicon that'll power the next decade of decentralized computing. And trust fund managers will probably realize it around 2027.

Image source: Getty Images.

7 of the top 10 companies focused on AI and building models are using AMD's new chips

The big question for AMD has been whether its newest AI accelerators will be able to compete with (and take some market share from) those of its massive rival,(NVDA 0.58%). If they can, then AMD, which is a fraction of the size of Nvidia, WOULD surely be a no-brainer buy. AMD's new Instinct MI400 chips will be available next year, and previously, OpenAI CEO Sam Altman said his company would use them and was enthusiastic about what they could do.

It appears OpenAI is far from the only tech leader interested in AMD's chips. On the second-quarter earnings call, AMD CEO Lisa Su said that "seven of the top 10 model builders and AI companies use Instinct." She was referring to the company's current chip, the MI350. The more advanced one coming to market next year may be even more popular, as AMD looks to narrow the gap between itself and Nvidia.

This is an impressive stat because it may indicate that companies are seeing AMD's chips as potential alternatives to Nvidia's. AMD may have been slower out of the gate when the AI revolution was first heating up, but now, as it's ramping up its AI chip development, it could take some meaningful market share away from Nvidia. The proof, as it usually is, will be in the numbers.

AMD's growth rate has been moving in the right direction

Another encouraging sign for AMD investors is that the company's sales growth has been firmly above 20% for multiple quarters. The trend has been a positive one over the past year.

AMD Operating Revenue (Quarterly YoY Growth) data by YCharts.

If the company can sustain this type of growth rate, it will inevitably capture the attention of more growth investors along the way.

The stock is a strong buy for the long term

Shares of AMD have rallied by more than 40% this year, and they may seem expensive, trading at over 100 times trailing earnings. But with the company arguably on the cusp of much more growth, especially as its new chips gain market share, there could be considerably greater upside ahead for the business and the stock. Its forward earnings multiple (which is based on analysts' consensus expectations) is 44. While that's still a bit high, it does reflect the significant growth expected from the business in the NEAR future.

For long-term investors, now is as good a time as any to load up on shares of AMD. The business looks to be on the right track, and as its new chips reach more customers, it could be a hot stock to own for years to come.