AMD and Ouster – Q3 2025

AMD Q3 25: Market timing

• AMD reported good results but investors who have problems holding stock over a long weekend were disappointed with the Q4 25 forecast causing the shares to dip slightly in after-hours trading.
• Q3 2025 revenues / EPS were $9.25bn / $1.20 ahead of forecasts of $8.7bn / $1.17 but it was the PC business that showed the most momentum.
• Here revenues grew by 73% to $4bn well ahead of estimates of $2.6bn while the data centre business grew by 22% to $4.3bn.
• Given the potential $60bn order that OpenAI has placed with AMD (albeit paid for by AMD shareholders), the market was hoping to see some of that materialise in Q4 25, but they were frustrated.
• Q4 25 revenues are expected to be $9.3bn – $9.9bn ($9.6bn) ahead of forecasts of $9.2bn but clearly, the market was hoping for more and the marked the shares down.
• However, I suspect there is an element of timing here as the last two sessions have seen a broad sell off as the market questions technology valuations and AMD has doubtless, fallen victim to that to certain degree.
• The good news is that the deal with OpenAI establishes AMD as the second-place runner to Nvidia in the market for AI chips.
• This is crucial because it means that AMD’s platform will now have far more pull with developers than it did in the past which is more than half of the battle.
• However, the valuation of this company remains a challenge as the shares have doubled this year and trade on 2025 PER of 64.8x and 2026 PER of 39.6x.
• The shares are already pricing in revenues and profits that are not guaranteed which could easily be substantially delayed if there is a correction.
• I would rather own Nvidia which with a lower valuation has profits now, and as a result will correct less should there be a major wobble.

Ouster Q3 25: Narrative in charge.

• Ouster reported good Q3 2025 results where expectations will be raised once again, confirming that for lidar outside of China, this is the horse to back.
• However, the easy money has already been made in this stock as it has moved from being hated to being liked by the market, meaning that taking profits is all about deciding when the narrative runs out of road.
• Q3 2025 revenues / EPS were $39.5m / LOSS ($0.37) ahead of revenue expectations of $37m and the company guided strongly for Q4 2025.
• Here revenues will be $39.5m – $42.5m ($41.0m) ahead of estimates of $36.9m setting the company up nicely to continue this solid pace of growth into 2026.
• Cash remained solid at $247m but this is in part due to the use of the at the market mechanism that the company put in place some time ago to issue new shares to raise money.
• As of Q2 2025, $59m had been raised with that rising to $94m in Q3 2025.
• This ensures the company’s stability, but comes at the price of dilution where the share count has risen by 23% from the average share count in 2024 of 47m shares.
• The net result is that the story remains intact, and I think that there is a strong growth trajectory ahead, but the dilution has pretty much negated the increases in cash flow and profits coming from rising estimates.
• By reducing the discount rate to 10% from the 11% it had in 2024 (which I think is fair as risk is falling), I can get to $26 per share.
• Following these numbers, the shares have bounced 11% to $30.6, meaning that the shares are over-valued but narrative is driving this stock not fundamentals.
• This is why I have not sold as the robotics and industrial automation stories remain intact and as interest grows in the coming few years, this could easily become a proxy for investing in these themes.
• Hence, I am sitting tight but with a finger poised over the sell button.