Advanced Micro Devices is facing a stock sell-off following its second-quarter earnings release, even as the chipmaker delivered doubling data center revenue and a strong margin recovery.

The pullback reflects a market where aggressive growth expectations were already priced into the stock after its value more than doubled earlier this year.

Despite meeting key operational milestones, AMD shares slipped as high valuation multiples left little room for anything short of exceptional results. The stock, which traded near $483.36 with a market capitalization of $789 billion, has retreated from its 52-week high of $584.73.

Data Center Acceleration and Comparison Baseline

AMD’s data center segment posted a 107% year-over-year revenue increase in the second quarter, marking a significant acceleration from the 57% growth recorded in the previous quarter. Sequential growth stood at 16%.

The massive year-over-year jump was partly amplified by weak comparisons from Q2 2025, when U.S. export restrictions on advanced chip sales to China weighed heavily on performance across the semiconductor sector.

By comparison, main rival Nvidia reported a 92% year-over-year surge and 21% quarter-over-quarter expansion in data center revenue during its fiscal first quarter of 2027, which ended April 26, 2026.

Financial Highlights and Operational Metrics

• Data Center Growth: Expanded 107% year-over-year and 16% sequentially.
• Operating Margin: Improved to 17%, reversing an operating loss of 2% from the same period last year.
• Trading Multiples: AMD trades at nearly 70 times forward earnings and 37 times projected 2027 earnings.
• Competitor Valuation: Nvidia trades at approximately 32 times trailing earnings.

Profitability Improves, but Valuation Creates a Gap

AMD demonstrated meaningful headway on profitability, turning around last year’s 2% operating loss to achieve a 17% operating margin in Q2. Expanding operating margins have long been a key requirement for bullish investors seeking sustainable earnings expansion.

However, valuation metrics continue to weigh on market sentiment. AMD currently trades at nearly 70 times forward earnings and 37 times estimated 2027 earnings. In contrast, Nvidia trades at approximately 32 times trailing earnings, offering investors existing profitability at a lower relative entry multiple.

Because AMD’s stock price had already factored in roughly 18 months of future growth, the solid second-quarter performance was insufficient to sustain the rally, leading investors to re-evaluate entry points relative to market competitors.