Introduction
On July 22, 2025, financial markets turned their attention squarely to artificial intelligence (AI) as two major players—Advanced Micro Devices (AMD) and Palantir Technologies—released their second-quarter earnings reports. Both companies are critical to the evolving AI ecosystem: AMD as a key hardware supplier in competition with Nvidia, and Palantir as a data analytics and AI software firm deeply embedded in both commercial and government sectors.
Following a volatile start to the month marked by macroeconomic uncertainty and geopolitical stress, the AI narrative returned to the spotlight with renewed force. The robust earnings and forward guidance from AMD and Palantir provided fresh evidence that the AI investment cycle remains intact, even as broader economic growth slows and monetary policy remains restrictive.
With investors hungry for clarity on the durability of tech-driven gains, Tuesday’s results helped reinforce confidence in AI as a structural growth theme rather than a passing trend. Equity markets responded accordingly, with tech leading a broad-based rally and investors recalibrating their expectations for the second half of 2025.
This article dissects the earnings results from AMD and Palantir, assesses the market reaction, and considers the broader implications for the AI sector and equity markets at large.
Body
AMD Surges on Strong Data Center Demand and AI Chip Momentum
Advanced Micro Devices delivered one of its strongest quarters in recent memory, driven by explosive growth in its data center segment and increasing demand for its MI300 series AI accelerators. Key earnings highlights include:
- Revenue: $7.35 billion (vs. $7.18 billion expected)
- EPS (non-GAAP): $1.19 (vs. $1.08 expected)
- Data Center Revenue: $2.84 billion, up 45% YoY
- Client Segment Revenue: $1.62 billion, flat YoY
- Gross Margin: 52.3%, up from 50.1% in Q1
CEO Lisa Su highlighted in the earnings call that demand for AMD’s AI-specific GPUs had surpassed internal forecasts and that the company is ramping production capacity in collaboration with key foundry partners. She also confirmed multiple large-scale contracts with U.S. cloud providers and hyperscalers.
Shares of AMD (AMD) jumped 8.7% on the day to close at $188.20, pushing the stock to a new 2025 high and helping to lead semiconductor stocks higher across the board.
Implications for the Semiconductor Sector
AMD’s blowout quarter underscores the breadth of demand for AI hardware, even as traditional computing demand remains muted. The positive readthrough boosted peers and suppliers:
- Nvidia (NVDA): +4.2%
- Broadcom (AVGO): +3.7%
- Marvell Technology (MRVL): +5.1%
- Taiwan Semiconductor (TSM): +3.9% (ADR)
Analysts have now begun upgrading full-year estimates across the sector, citing improved order visibility and sustained capital expenditure from cloud providers.
The Philadelphia Semiconductor Index (SOX) rose 5.3%, marking its best day since May.
Palantir Exceeds Expectations, Expands AI Commercial Business
Palantir Technologies, long known for its government contracts, delivered a second-quarter earnings report that showed accelerating commercial adoption of its AI platforms. The numbers came in above consensus:
- Revenue: $755 million (vs. $736 million expected)
- EPS (adjusted): $0.09 (vs. $0.07 expected)
- Commercial Revenue: $388 million, up 32% YoY
- Government Revenue: $367 million, up 14% YoY
- Free Cash Flow: $142 million
The company’s Foundry and AIP (Artificial Intelligence Platform) products saw strong demand across sectors including healthcare, finance, and manufacturing. CEO Alex Karp emphasized that enterprise clients are moving from pilot programs to full-scale deployments and cited “multi-year AI transformation partnerships” as a growing portion of its sales pipeline.
Shares of Palantir (PLTR) rallied 10.4% to $34.10, their highest level since January 2022.
The Software Side of the AI Boom
Palantir’s results demonstrate that AI’s momentum isn’t just about chips—it’s increasingly about software platforms that can translate raw computational power into actionable business outcomes. The positive tone from Palantir also lifted other AI-exposed software names:
- Snowflake (SNOW): +3.6%
- Datadog (DDOG): +4.1%
- ServiceNow (NOW): +2.8%
Notably, Palantir reported that 62% of its new commercial clients had never engaged with the firm prior to 2024, suggesting AI adoption is expanding beyond legacy customer bases.
Tech Leads Market Rally as AI Enthusiasm Returns
Buoyed by AMD and Palantir’s results, equity markets rallied broadly on Tuesday, with tech leadership reasserting itself after last week’s macro-driven losses.
- Nasdaq Composite: +2.5% to 16,895
- S&P 500: +1.8% to 5,373
- Dow Jones Industrial Average: +1.2% to 39,130
Technology and communication services were the top-performing sectors, gaining 3.4% and 2.9% respectively. Even previously lagging segments like consumer discretionary and financials joined the rally.
ETF flows suggest that investors are rotating back into growth-focused vehicles:
- ARK Innovation ETF (ARKK): +4.6% daily return
- Invesco QQQ Trust (QQQ): +2.7%
- Semiconductor ETF (SMH): +5.2%
Market internals showed improving breadth, with 82% of S&P 500 components closing higher. Trading volume was 11% above the 20-day average, indicating conviction behind the move.
Bond Market Treads Water as Earnings Overshadow Macro
Bond markets were quiet despite the equity surge. Traders largely set aside macroeconomic concerns for the day, awaiting upcoming data later in the week.
- 10-year Treasury yield: unchanged at 3.88%
- 2-year Treasury yield: slipped 1 bp to 4.18%
The muted reaction suggests that investors are temporarily refocusing on micro-level earnings developments rather than macroeconomic signals. However, inflation data due Friday (PCE) and the Fed’s next policy moves remain key drivers for fixed-income markets going forward.
Corporate bond spreads narrowed modestly, and investment-grade debt saw net inflows.
Dollar Mixed; Risk Currencies Gain on Risk Appetite
The U.S. dollar saw mixed performance, reflecting both the improved risk tone and nuanced global central bank dynamics:
- Dollar Index (DXY): flat at 104.6
- EUR/USD: +0.3% to 1.091
- GBP/USD: +0.4% to 1.303
- USD/JPY: unchanged at 141.9
Emerging market currencies saw modest gains as investor risk appetite improved:
- Brazilian real: +0.6%
- Indian rupee: +0.3%
- Mexican peso: +0.4%
Currency traders are awaiting Wednesday’s PMI releases and Thursday’s Bank of Japan decision for further direction.
Commodities Rebound Slightly, Led by Copper
Commodities rose modestly on Tuesday, aided by the positive tone in equities and improving sentiment around AI-linked industrial demand.
- Gold: +0.4% to $2,608/oz
- Brent crude: +0.6% to $83.20/barrel
- Copper: +1.3% to $3.79/lb
The move in copper was particularly notable given its dual role as both a construction input and a critical component in electrical infrastructure—key to AI data center expansion. Investors continue to monitor Chinese stimulus efforts and their potential impact on base metal demand.
Crypto Rebounds Alongside Tech
Crypto markets mirrored the risk-on tone seen in equities, with strong gains across major tokens:
- Bitcoin (BTC): +3.1% to $81,000
- Ethereum (ETH): +3.8% to $4,320
- Solana (SOL): +4.7% to $177
- Polygon (MATIC): +6.2% to $1.17
The rally coincided with reports that BlackRock and Fidelity are exploring structured crypto products for pension funds, adding to institutional engagement.
Crypto ETFs also saw inflows:
- iShares Bitcoin Trust (IBIT): +$198 million
- VanEck Ethereum Trust (ETHV): +$102 million
Derivatives markets showed rising open interest and elevated funding rates, suggesting renewed speculative activity.
AI Investment Cycle: Enduring or Euphoric?
The latest results from AMD and Palantir have reignited debate about the sustainability of AI’s investment boom. Bulls argue that we are in the early innings of a multi-year capex cycle, driven by cloud infrastructure, edge computing, and enterprise automation. Bears caution that market valuations may have run ahead of near-term fundamentals, particularly as broader demand conditions soften.
Key questions include:
- Can hyperscalers maintain AI infrastructure spending amid rising costs and slowing ad revenue?
- Will AI-driven productivity gains materialize in ways that justify current valuations?
- Is there room for multiple winners in the AI hardware and software stack?
For now, earnings beats and raised guidance provide the bulls with ammunition, but upcoming reports from Microsoft, Alphabet, and Meta will be crucial in determining if momentum can be sustained.
What’s Ahead: Big Tech and Macro Data
Tuesday’s earnings results set a strong foundation for the remainder of the week, which will be shaped by critical releases:
- July PMIs (Wednesday): Expected to show continued U.S. strength and Eurozone contraction
- Bank of Japan policy meeting (Thursday): Anticipated to mark a policy shift away from yield curve control
- U.S. Core PCE Inflation (Friday): Key input for Fed rate path
- Earnings reports from Microsoft, Alphabet, Meta (Wednesday–Friday): Will test the durability of the AI and ad-driven business cycle
Markets are likely to remain volatile, with sentiment swinging between earnings optimism and macro uncertainty.
Conclusion
July 22, 2025, marked a critical inflection point for markets as AMD and Palantir reignited AI enthusiasm with impressive earnings and bullish outlooks. Their results affirmed that the secular AI adoption wave remains powerful, even amid a mixed macroeconomic environment. Equity markets responded with renewed risk appetite, led by technology and growth sectors.
The strength in semiconductors and AI software underscores a market increasingly driven by innovation and productivity potential rather than cyclical consumption. That said, challenges remain: policy uncertainty, inflation dynamics, and global trade tensions continue to hover over sentiment.
For investors, the key considerations going forward include:
- Will AI-related earnings continue to surprise to the upside, or are we nearing saturation?
- Can tech leadership endure without broader participation from lagging sectors?
- How will macro data shape monetary policy, and can rate cuts arrive soon enough to support valuations?
With a dense slate of earnings and economic releases still to come, July’s final trading sessions will be pivotal. But for now, the AI narrative has reasserted itself—and markets are responding with conviction.
