For a company that just delivered its strongest quarter on record, AMD spent this week in an unusually defensive posture. The chipmaker’s blowout earnings were overshadowed within hours by a high-profile defection, forcing management to pivot quickly with an acquisition aimed squarely at its competitive weak spot.
The Numbers That Should Have Been Enough
AMD’s fiscal second quarter delivered revenue of $11.5 billion, a 50 percent jump year over year and comfortably ahead of the $11.31 billion consensus. Adjusted earnings per share came in at $1.66, edging past the $1.61 analysts had penciled in. The data center segment — now the company’s growth engine — surged 107 percent to $6.72 billion, representing 58 percent of total revenue. Capital expenditures more than doubled from $282 million to $808 million, underscoring the scale of AMD’s buildout in AI infrastructure. Management guided third-quarter revenue to roughly $13 billion, with a $300 million band in either direction, implying growth of about 41 percent from a year earlier and sailing past the $12.5 billion consensus.
The SpaceX Bombshell
Those figures were barely digested before the market learned that Elon Musk’s SpaceX would deploy exclusively Nvidia’s Rubin GPUs and Vera CPUs for its planned Starmind-AI1 satellite constellation, with deployment slated for 2027. The announcement effectively ends SpaceX’s procurement of AMD chips and landed like a cold splash on a stock that had just reported stellar numbers. AMD shares fell as much as 10 percent on Wednesday, with the secondary source pegging the Thursday decline at roughly 8 percent before a partial recovery.
CEO Lisa Su pushed back, emphasizing that the relationship with SpaceX remains a long-term one. She also pointed to continued collaboration with Meta, Microsoft, OpenAI, and Anthropic, while flagging expectations for a softer PC market in the months ahead. The immediate financial damage is limited — SpaceX was a potential reference customer in the nascent space data center market rather than a meaningful contributor to current revenue — but the symbolic weight of choosing a rival was not lost on investors.
A Strategic Countermove
Within 48 hours, AMD announced a definitive agreement to acquire Taalas, a Toronto-based startup founded in 2023 that hardwires AI models directly into silicon. The approach, which founder Ljubisa Bajic summarizes as “The Model is The Computer,” is designed to slash inference latency dramatically. Taalas had raised $219 million in venture funding, including $169 million in February alone. AMD did not disclose the purchase price, but the deal is expected to close in the fourth quarter of 2026. The technology will be folded into AMD’s full-stack platform encompassing Helios racks, Instinct GPUs, EPYC processors, and the ROCm software environment.
The acquisition continues a notable shopping spree: AMD picked up MK1 in November, MEXT in June, and FastFlowLM in July. The pattern suggests a deliberate strategy to bolt on inference capabilities rather than build everything in-house.
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Wall Street’s Mixed Verdict
Analyst reactions to the quarter were split along familiar lines. D.A. Davidson lifted its price target from $425 to $550 with a buy rating, while Morgan Stanley raised its target from $410 to $465 but held a neutral stance, citing valuation concerns despite strong data center demand. Bank of America, KeyBanc, and Bernstein saw targets confirmed or raised in the $620–$725 range, with KeyBanc citing confidence in the Helios rack system ramp.
The average analyst price target now sits at $542.53, with a consensus rating of moderate buy. Institutional behavior tells a more cautious story: Mirabaud & Cie trimmed its AMD position by 10.9 percent in the second quarter, though it still holds roughly $5 million worth of shares. Insider activity has been one-directional — $147.1 million in sales over the past three months with no management purchases.
The Broader Picture
AMD’s existing Anthropic agreement adds another layer of context: the company is committing up to $2 gigawatts of Instinct MI450 chip capacity with investments of up to $5 billion. That deal, combined with the Taalas acquisition, suggests AMD is positioning for the inference-heavy phase of AI adoption, even as it fights to hold onto marquee customers.
Adding to the noise, AMD informed partners of a minimum 10 percent price increase on Radeon RX 9000 series graphics cards starting in August, attributed to rising GDDR6 memory costs.
The stock has since steadied. It traded at €429.75 on Friday, up 1.22 percent on the day and 4.08 percent for the week, recovering part of the post-SpaceX selloff. Still, the shares remain 4.26 percent below their 50-day average of €448.89 — a reminder that the market’s mood toward AMD can shift as quickly as its customer roster.
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