Advanced Micro Devices, Inc. (AMD) Earnings & Analysis

Latest quarter

AMD reported Q2 FY2026 revenue of $11.5 billion, up 50.1% from $7.7 billion a year earlier. The company’s adjusted EPS, as the consensus counts it, was $1.66, above the $1.61 consensus, while revenue of $11.5 billion exceeded the $11.3 billion consensus.

The filing says higher Data Center revenue, Client and Gaming revenue, and Embedded revenue drove the sales increase. Data Center revenue was $6.7 billion, with demand for EPYC processors and Instinct MI350 Series GPUs cited as the main drivers; Client and Gaming revenue increased 6%, while gaming revenue declined 31% because of lower semi-custom revenue. Embedded revenue rose 19% as demand strengthened across end markets.

AMD reported gross margin of 53.8%, compared with 39.8% a year earlier, and operating margin of 17.3%, compared with −1.74%. The filing attributed the gross-margin change partly to the absence of prior-year inventory and related export-control charges and to product mix. Free cash flow was $1.6 billion, versus $1.7 billion a year earlier. The company’s Q2 gross-margin result of 53.8% was below its 56.0% guide.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Lisa Su said demand for server CPUs and data-center AI products was driving the company’s outlook. She said Data Center revenue more than doubled year over year to $6.7 billion, with EPYC processor and Instinct accelerator demand contributing, and said cloud and enterprise server sales each grew more than 70% year over year.

Su said AMD had added supply through the year after demand for servers increased, but told analysts that the server CPU supply chain remained tight. She said the company expected server revenue to grow more than 80% year over year in the second half of 2026 and more than 70% for full-year 2027. She also said the company expected Data Center segment revenue to more than double year over year in 2027, with the data-center AI ramp contributing.

On the Helios platform, Su said initial shipments were expected later in the third quarter, followed by a larger fourth-quarter ramp and further increases in 2027. Analysts asked about the timing, supply and yields of the ramp; Su said yields would be expected to improve over the first few quarters of a complex product ramp. She did not give an exact data-center AI revenue figure for 2027, while saying revenue per gigawatt remained in the double-digit billions.

Jean Hu said gross margin was primarily determined by business mix. She said server CPU growth was accretive to overall gross margin, while data-center AI could add revenue and gross profit even though its gross margin was slightly below the corporate average. Hu also cited a recovering Embedded business as a gross-margin tailwind for 2027.

Su said AMD was planning for a softer PC market in the second half because higher memory and component costs were weighing on demand. She said the company expected client revenue to perform better than the market, while gaming revenue was expected to face a significant double-digit decline in the second half.

Guidance

For Q3 FY2026, AMD expects revenue of $13.0 billion, plus or minus $300 million, and non-GAAP gross margin of approximately 56.0%. Jean Hu said AMD expects non-GAAP operating expenses of approximately $3.65 billion, compared with its previous Q2 FY2026 guide of approximately $3.3 billion. The company also expects a 13.0% non-GAAP effective tax rate.