AMD Shares Drop Despite Strong Q3 Performance
Shares of Advanced Micro Devices (AMD) saw a 1% decline in after-hours trading yesterday, even though the company surpassed analyst expectations for both sales and earnings, according to CNBC. A significant factor contributing to this downturn appears to be the announcement from e-commerce giant Amazon (AMZN) that it plans to divest its stake in AMD during the third quarter.
The stock continued to drop in overnight trading. This pattern might be disappointing for investors, yet some savvy individuals could see this dip as a chance to invest in AMD, especially with the promising long-term growth prospects tied to the booming artificial intelligence (AI) sector. Notably, AMD is set to play a crucial role in powering the next generation of supercomputers at Oak Ridge National Laboratory, which is being touted as the first dedicated AI factory in the U.S. for scientific endeavors.
That said, investing directly in AMD does come with particular risks, such as unexpected changes in global semiconductor export regulations or significant supply chain issues related to manufacturing. These operational challenges could lead to a sudden drop in AMD’s stock price.
Investors looking to leverage this recent selloff without fully exposing themselves to the company-specific volatility might consider investing in an exchange-traded fund (ETF) that includes AMD. This approach allows for the opportunity to benefit from AMD’s growth while avoiding some of the risks that can arise from both sector-specific challenges and geopolitical dynamics.
Before making any decisions regarding these ETFs, it’s worth reviewing AMD’s overall performance in the third quarter. The company reported earnings that exceeded the Zacks Consensus Estimate by 2.6%, with revenues surpassing expectations by 6%. Year-over-year, sales rose by 36%, and profits grew by 60%. This growth was primarily fueled by strong demand across AMD’s data center, AI, server, and PC segments.
When looking at specific sectors, AMD’s Data Center, Client, and Gaming units experienced robust double-digit revenue growth, while embedded revenue saw a slight decline.
As of September 2025, AMD reported cash and equivalents totaling $4.81 billion, up from $3.79 billion at the end of December 2024. The company’s free cash flow has more than tripled, largely thanks to record sales of its EPYC, Ryzen, and Instinct processors.
During the third quarter, AMD also launched ROCm 7 software, which is its most advanced release yet. This software enhances distributed inference and simplifies the deployment and management of Instinct solutions.
Moreover, AMD has bolstered its x86 embedded portfolio with two significant offerings: the EPYC Embedded 4005 series and the Ryzen Embedded 9000 processors, targeting industrial applications and network security.
Looking ahead, AMD plans to unveil the next-generation 2-nanometer Venice processors and MI400 series accelerators next year. Oracle (ORCL) will be a primary partner for launching the MI450 series, with plans to integrate thousands of MI450 GPUs across Oracle Cloud Infrastructure from 2026 onwards.
The iShares Semiconductor ETF (SOXX) has net assets of $16.11 billion, providing exposure to 30 U.S. semiconductor companies. AMD comprises approximately 9.97% of this fund. Since the start of the year, SOXX has gained 38.3%, incurring a fee of 34 basis points.
The Invesco PHLX Semiconductor ETF (SOXQ), with a NAV of $54.95 per share, includes 30 U.S.-listed semiconductor companies, positioning AMD at 9.87% of the fund. SOXQ has soared by 40.9% this year and charges 19 basis points in fees.
Another option is the Invesco AI and Next Generation Software ETF (IGPT), valued at $59.22 per share, focusing on companies that contribute to future software development. AMD stands at 10.56% of this fund, which has risen by 31% year-to-date and charges 56 basis points in fees.
