Advanced Micro Devices (AMD) experienced a 6.9% drop in stock despite reporting record revenues of $11.54 billion, a 50% year-over-year increase. The Data Center segment drove sales, doubling revenue to $6.7 billion, and the Client division saw a 23% rise to $3.1 billion. However, the Gaming division suffered a 31% decline to $779 million. AMD's stock is now traded significantly above its fair value estimate, as investors have high expectations for future AI dominance, leading to profit-taking despite strong performance.

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AMD Stock Drops 6.9% Despite Record $11.5 Billion Revenue

Khac Phu Nguyen

Wed, August 5, 2026 at 4:00 PM EDT2 min read

AMD \ -7.04%

This article first appeared on GuruFocus.

Advanced Micro Devices ( NASDAQ:AMD), a semiconductor company powering AI servers, PCs and high-performance computing, delivered another blockbuster quarter, but the market wasn't impressed. The stock dropped 6.9% during Wednesday's regular session, even after revenue surged 50% year over year to a record $11.54 billion. Management also guided for roughly $13 billion in third-quarter revenue, plus or minus $300 million. That's the reality of AI stocks today. Good isn't enough when investors are already betting on greatness.

The Data Center business is carrying the company. Revenue from the segment more than doubled to $6.7 billion, making up 58% of total sales as demand for EPYC CPUs and Instinct AI accelerators kept accelerating. The Client division also turned in a solid performance, with revenue climbing 23% to $3.1 billion. Gaming, however, remained a drag, with revenue falling 31% to $779 million as semi-custom demand cooled. AMD isn't easing off the gas either. Research and development spending jumped 33% to $2.53 billion as the company poured more cash into its AI roadmap, while GAAP operating margin swung back to 17% after last year's export-control charges distorted comparisons.

The next quarter now becomes the real test. AMD expects another sequential revenue jump of about 12.7% while holding non-GAAP gross margin around 56%, meaning execution has to stay nearly flawless. Inventory also climbed to $8.47 billion, so investors will be watching whether those AI chips leave warehouses as quickly as they're being produced.

AMD Stock Drops 6.9% Despite Record $11.5 Billion Revenue·us.finance.gurufocus

The GuruFocus Value tells an equally important story. AMD trades at $486.41, almost double its GF Value estimate of $247.73, putting the stock roughly 96% above fair value. That's a reminder that investors aren't paying for today's earningsthey're paying for years of AI dominance. When expectations are this high, even record-breaking quarters can trigger profit-taking instead of celebrations.