AMD's Fund Buying Is Stale Data, but Its Earnings Test Is Current

Twenty-three large investment funds bought or added to Advanced Micro Devices during the second quarter, but those filings are a starting point rather than a current buy signal.

Eighteen managers opened new AMD positions and five added to existing stakes, according to second-quarter 13F filings covering holdings as of June 30. Dragoneer Investment Group made AMD 19.3% of its reported U.S. equity portfolio, while Whale Rock Capital increased its position more than twentyfold. Tiger Global and Sands Capital opened stakes valued at approximately $392 million and $391 million.

Several of the same managers reduced positions in competing chip companies. Dragoneer exited Nvidia, Whale Rock cut Broadcom by 92%, and Sands reduced Taiwan Semiconductor by about one-third. Four smaller funds sold Broadcom and opened AMD positions during the quarter.

The limitation is timing. A 13F reports long U.S. equity positions at quarter-end and can be filed weeks later. It does not show the purchase price, short positions or whether the manager still owns the stock. AMD had fallen 13% since June 30 in the original analysis, roughly matching Broadcom and Taiwan Semiconductor, while Nvidia had risen 3%. The funds' next filings, due by November 16, should provide a more current view.

AMD's operating outlook is more useful. The company reported second-quarter revenue of $11.54 billion, up 50% from a year earlier, with data-center revenue representing 58% of sales. Management guided third-quarter revenue to about $13 billion, plus or minus $300 million, and non-GAAP gross margin to approximately 56%.

The larger valuation question is 2027. Consensus estimates cited in the original analysis put normalized earnings per share at $4.17 in 2025, $7.62 in 2026 and $15.93 in 2027. That jump depends on Helios AI rack deployments and continued growth in EPYC server processors. Management said Helios had begun ramping and expected data-center sales to accelerate in the second half of 2026.

Investors were already paying for much of that expansion. AMD traded near 45 times forward earnings in the source analysis, above its five-year average of 35 times and above the cited forward multiples for Nvidia, Taiwan Semiconductor and Broadcom. Those comparisons are sensitive to estimate definitions and dates, so the important point is not a single relative multiple. It is the amount of future execution embedded in AMD's price.

Third-quarter revenue was expected near $13.09 billion. The more demanding number was the fourth-quarter outlook, because full-year consensus implied about $16.2 billion of revenue, 58% above the year-earlier period. A guide near that level would support the planned Helios ramp. A weaker outlook would push more of the earnings case into 2027.

There are two additional constraints. Intel warned that PC weakness could continue through at least the first half of 2027, and AMD's client business represented about 27% of second-quarter sales. AMD also granted OpenAI and Meta warrants covering up to 320 million shares at a nominal exercise price, equal to 19.6% of shares outstanding if fully exercised under their terms. Those strategic agreements can secure demand, but they also make dilution part of the return calculation.

The funds' purchases show that sophisticated investors saw an opportunity in June. They do not answer whether AMD was attractive in November. Revenue guidance, gross margin, deployment timing and dilution provide the current evidence.