Advanced Micro Devices reported better-than-expected second-quarter results, but investors appeared disappointed because they were expecting an even stronger performance from the chipmaker. AMD shares fell 8.5% in premarket trading on Wednesday, according to the report.

AMD stock falls after earnings beat estimates as investors seek stronger AI growth. (REUTERS/Chris Helgren) (REUTERS)

AMD reported $11.5 billion in second-quarter revenue, up 50% from a year earlier. Wall Street had expected revenue of about $11.3 billion. The company also reported adjusted earnings of $1.66 per share, beating the $1.62 per-share estimate.

AMD said it will begin shipping its Helios rack-scale offering later in the third quarter, with momentum expected to increase after that. This means investors may want to see actual sales and market-share gains before becoming more confident about AMD's AI growth story.

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AMD reported an adjusted gross margin of 56% in the second quarter, up from 55% in the first quarter. However, the company expects its adjusted gross margin to remain at around 56% in the third quarter. That lack of improvement appears to have added to investor disappointment.

The company expects revenue from its data-center segment to grow more than 100% year over year in 2027. This suggests AMD still sees major growth ahead from demand for servers and AI-related computing.

Bernstein analyst Stacy Rasgon said AMD's stock pressure could also be linked to expectations created by Intel’s results in July, according to Market Watcher. Intel had reported its strongest top-line revenue growth in more than 15 years, which may have raised the bar for AMD.

Rasgon said buy-side investors — large professional investors such as mutual funds and other institutions — already had a fairly bullish outlook on AMD, according to Market Watcher.

But investors wanted stronger signs of future growth, better margin guidance and clear evidence that AMD can gain more ground in AI chips. With the stock already up 142% this year, the market had little patience for a report that was merely better than expected.

If AMD can show strong execution and continued gains in AI and data centers, the current drop could eventually look different. For now, however, the market appears to be saying that beating estimates is not enough when expectations are already extremely high.