Disney's stock experienced a jump after the company reported adjusted earnings per share that surpassed expectations for its third quarter. The positive performance was attributed to strong demand for experiences. Disney also exited its stake in A+E Media, which includes channels like Lifetime. This news led to an optimistic outlook for the company's financial performance.
Conversely, AMD's stock dropped significantly, by roughly 6% to 10% after hours, despite the company reporting strong second-quarter results and forecasting third-quarter revenue above analyst consensus. AMD's second-quarter revenue climbed 50% to $11.5 billion, exceeding the $11.3 billion analysts expected, with adjusted earnings coming in at $1.66 per share, above the $1.62 forecast. Data center revenue was a standout, more than doubling to $6.7 billion, slightly above the $6.6 billion average estimate, largely driven by AI accelerator chips.
However, the company's forecast for third-quarter revenue, approximately $13 billion (plus or minus $300 million), while technically a beat over the $12.5 billion analyst consensus, disappointed investors. Some Wall Street projections had anticipated a forecast closer to $14 billion or higher, leading to the stock's decline. The market reaction underscored rising expectations regarding the pace at which AI investments should translate into revenue growth and profitability for AMD.
Gross margin for AMD slipped to 54% against a consensus estimate of 56% for the full year, with margin pressure expected in the near term due to the ramp-up of Helios, its first rack-scale AI system. While AMD expects an adjusted gross margin of about 56% for the third quarter, in line with market expectations, the revenue mix is projected to shift toward lower initial margin AI accelerators over time. The company's ability to sustain a non-GAAP operating margin exceeding 35% and EPS over $20 within the next 3 to 5 years remains a key focus for investors.
