The confidence in the US stock market bull market is in urgent need of support, AMD's financial report is needed to help boost it.

As the upward trend in the US stock market faces obstacles, AI giant AMD (AMD.US) will announce its financial report after the market closes on Tuesday. After experiencing its best stock performance in nearly 25 years in the past month, AMD needs to prove that it is indeed the main beneficiary of the AI spending boom. This financial report will either boost the confidence of the risk asset market that has been suppressed, or further drag down the market. Wall Street currently expects AMD's third-quarter revenue to be $8.75 billion, with earnings per share (EPS) of $1.17. On Tuesday, another AI giant, Palantir, failed to satisfy with its financial performance, and Wall Street executives also warned that stock index futures were weak due to overvaluation in the stock market. Meanwhile, as Federal Reserve officials sent mixed signals about the interest rate path, the US dollar rose to its highest level since August. US bond prices rebounded, with the 10-year bond yield falling 1 basis point to 4.10%. Gold prices fell for the third consecutive trading day, while Bitcoin approached its lowest level since June. Wall Street executives, including Ted Pick of Morgan Stanley and David Solomon of Goldman Sachs Group, Inc., said at a summit in Hong Kong that the market may experience a pullback of more than 10% in the next 12 to 24 months. Although they pointed out that a pullback may be a healthy trend, their caution comes from the uneasiness about stock prices, which have soared more than 35% since the S&P 500 hit a low in April, mainly due to the crazy rise of tech giants related to the AI boom. AMD's high valuation attracts market attention to future guidance AMD's stock price surged by 58% in October, marking its best single-month performance since January 2001 and becoming the best-performing stock in the S&P 500 index last month. This rally was mainly driven by its partnership agreement with OpenAI, which may bring in new revenues worth hundreds of billions of dollars for AMD. Boosted by this news, AMD's stock price skyrocketed by nearly 24% on October 6. 2025 has been an extraordinary year for AMD. Despite a 18% decline in 2024, the stock has risen by 115% so far this year, ranking as the eighth best performer in the S&P 500 index. It is also one of the top-performing stocks in the Philadelphia Semiconductor Index. AMD's stock price has even outperformed its main competitor NVIDIA Corporation (NVDA.US), which has risen by over 54% this year. In addition to its partnership with OpenAI, AMD has also signed a series of AI chip sales agreements. With the current expected P/E ratio of nearly 43 times - the highest since April 2024, investors are hoping to hear the latest outlook on the company's profit prospects. Neville Javeri, head of the Empiric LT Equity team at Allspring Global Investments, which manages about $15 billion in assets, said, "AMD is on an unprecedented growth trajectory, allowing the market to overlook concerns about its high valuation." Although the partnership with OpenAI is undoubtedly the focus of analysts, the impact of this partnership on financial data may still be difficult to see. At the same time, data shows that market expectations for AMD's third-quarter net profit have been lowered by 1.2% over the past month. Therefore, AMD's performance outlook is crucial. Wall Street is generally betting on the company's smooth execution, as evidenced by analysts raising their earnings and revenue expectations for 2026. Over the past month, market expectations for AMD's revenue next year have increased by 4.6%, with net profit expectations soaring by 12%. Neville Javeri said, "Even though AMD has performed well this year, there are new risks surrounding its ability to execute these transactions. If the results are not as expected, it could be a costly lesson." Maintaining strong stock performance may not be easy. Although AMD is gradually gaining market recognition as a strong competitor to NVIDIA Corporation, the latter still firmly controls the core market of AI chips. Furthermore, the deal between AMD and OpenAI has also heightened concerns in the market about the structure of AI financing cycles. According to the terms of the agreement, OpenAI can purchase up to 160 million shares of AMD stock at a price of $0.01 per share when certain milestones are reached in specific projects, equivalent to about 10% of the outstanding shares. AMD's high valuation means that the stock price may come under pressure if future growth fails to meet analyst expectations. Currently, its P/E ratio is significantly higher than the five-year average (about 32 times) and also significantly higher than NVIDIA Corporation. Although AMD's revenue growth is expected to be slower, with an expected growth of 28% this year and 27% next year, NVIDIA Corporation's revenue growth has been around 56% in the past two years. AMD's closing price on Monday was $259.65, more than 5% above the average target price of analysts, indicating that the market generally believes that there is limited room for the stock to rise. From a technical standpoint, the 14-day relative strength index (RSI) is 69.8, close to the overbought threshold. Big capital expenditures from giants support the heat of the AI sector However, with tech giants continuing to increase their investments in AI, AMD's stock price may still receive support. Data shows that the combined capital expenditures of Alphabet (GOOGL.US), Meta (META.US), Amazon.com, Inc. (AMZN.US), and Microsoft Corporation (MSFT.US) in the last quarter exceeded $110 billion, with total spending expected to increase by 34% year-on-year in the next 12 months, reaching about $440 billion. Supply chain data shows that about 13% of AMD's revenue comes from these four companies. Some analysts have pointed out that this capital expenditure "elevates the visibility of AI chip manufacturers" and stated that "this growth in spending will support the performance of AI chip suppliers (such as NVIDIA Corporation, AMD, Broadcom Inc., and Astera Labs) in the second half of the year, while mitigating the risk of budget exhaustion for super-scale cloud providers." Timothy Ghriskey, senior portfolio strategist at Ingalls & Snyder, said that large-scale capital expenditures will continue to support transactions related to AI. He said, "The amount of money that large tech companies are investing is too much, there is enough 'cake' to go around in the market. Indeed, there are some stocks with lower valuations, but the real story is the amazing growth of AI and technology. This trend is far from over. Yes, NVIDIA Corporation is the market leader, but more and more people are realizing that AMD's performance is equally impressive."