AMD reported earnings that fell below expectations, with an adjusted EPS of $0.48 compared to the anticipated $0.49. However, revenue outpaced forecasts at $7.69 billion, exceeding the projected $7.40 billion.
The company recorded $800 million in inventory and related charges owing to U.S. export controls. For Q3, AMD forecasts revenue of $8.7 billion, surpassing the expected $8.31 billion, with a projected GAAP gross margin of around 54%.
The revenue outlook does not include potential income from MI308 AI chip shipments to China due to regulatory uncertainty. Following the announcement, AMD shares saw an increase of approximately 2%.
Looking back at that earnings report from late 2022, we saw a classic mixed signal for AMD. The company absorbed a large inventory charge due to new US export rules but countered with surprisingly strong forward guidance. This created uncertainty, which is an environment derivative traders can use to their advantage.
Following such an event, implied volatility tends to drop as the immediate earnings risk is removed. This presents an opportunity for traders to purchase options, both calls and puts, at a relatively cheaper price for the coming weeks. The market is now digesting the news and looking for the next catalyst.
That strong guidance back then was an early indicator of the AI boom that propelled the stock through 2023 and 2024. With recent industry reports from mid-2025 showing AMD has now captured nearly 35% of the data center AI accelerator market, traders might consider buying call options to bet on continued momentum. The forecast excluding MI308 sales to China at the time proved to be a conservative and wise move.
However, the inventory charge tied to China serves as a reminder of a persistent geopolitical risk. Given the ongoing tech tensions, which have been a constant theme since the early 2020s, buying put options could be a smart hedge against any sudden regulatory announcements. This risk remains a key factor in the stock’s behavior.
For those wanting to limit risk, a bull call spread would be a viable strategy. This involves buying a call option at a lower strike price and selling one at a higher strike, capping potential gains but significantly reducing the initial cost. It is a way to bet on modest upside movement over the next several weeks.
The small 2% share price increase after that 2022 report shows the market was weighing both the good and the bad. Today, with so much optimism about AI already reflected in the stock price after its massive run, any positive developments in the coming weeks will need to be substantial to trigger a similar move. We must consider that high expectations are now the baseline.
