AMD Q2 Revenue Hits $11.5B on Data Center Surge

Advanced Micro Devices reported record second-quarter 2026 financial results on its earnings call, with CEO Lisa Su highlighting the company's accelerating position in data center and AI computing. Revenue rose 50% year over year and 13% sequentially to $11.5 billion. Data center revenue more than doubled to $6.7 billion and now accounts for approximately 58% of total company revenue, compared with 42% a year earlier. Diluted earnings per share increased approximately 82% year over year on a comparable basis. Non-GAAP gross margin reached 56%, up more than 200 basis points from a year earlier, while operating income was $3.1 billion, representing a 27% operating margin.

The data center segment's growth was powered by strong adoption of EPYC server processors and Instinct AI accelerators. Data center revenue increased 107% year over year, with the company recording its fifth consecutive quarter of record server CPU revenue. Cloud and enterprise sales each rose more than 70% year over year. Su said AMD gained x86 server revenue share as customers expanded deployments of the fifth-generation EPYC Turin and fourth-generation EPYC Genoa processor families. Turin processors now power nearly one-third of more than 1,600 EPYC public-cloud instance types globally. The sixth-generation EPYC Venice family, which uses AMD's Zen 6 core architecture and two-nanometer technology, is in production, with major original equipment manufacturers expected to launch platforms and leading cloud providers planning deployments beginning later in 2026.

AMD's data center AI business more than doubled year over year, driven by broadening Instinct MI350-series adoption. The company's Helios rack-scale AI platform, which combines Venice CPUs, MI450-series GPUs, Pensando networking and ROCm software, is now in production. Initial Helios shipments are expected to begin in the third quarter of 2026 and ramp through the fourth quarter and into 2027. Su noted that demand for Helios is ahead of AMD's initial forecasts in terms of expected volumes. Anthropic has announced plans to deploy up to 2 gigawatts of MI450-series GPUs in Helios systems, with the first gigawatt scheduled to begin deployment in the first half of 2027. The company has also announced AI infrastructure commitments from OpenAI, Meta, and Microsoft.

During the earnings call's question-and-answer session, Su provided ambitious guidance: AMD expects the server CPU business to grow more than 80% year over year in the second half of 2026 and more than 70% in 2027. The company expects its overall data center segment revenue to more than double in 2027, with AI accelerators driving a substantial portion of that growth. AMD increased its outlook for the data center AI accelerator market, now forecasting annual growth of more than 45% to approximately $1.4 trillion by 2030, and it expects the server CPU market to grow more than 50% annually to about $220 billion over the same period. Su said the broader market for high-performance and AI computing is growing at approximately 40% annually over the next several years and is approaching $2 trillion by 2030, and that AMD expects to grow faster than that market.

Chief Financial Officer Jean Hu noted that server CPU supply is tight in 2026 following stronger-than-expected demand, but AMD expects supply conditions to improve in 2027 as demand becomes more predictable and additional capacity comes online. The company has been working across its supply chain—including wafers, back-end capacity, packaging and substrates—to support growth in server and AI products. Hu said gross-margin performance in 2027 will depend in part on the pace of server CPU and data center AI ramps, with server CPU growth supporting margins while data center AI products may carry gross margins below the corporate average but contribute substantial gross profit as volumes increase.

Outside the data center segment, AMD's client and gaming segment generated $3.8 billion in revenue, up 6% year over year. Client revenue rose 23% to $3.1 billion, driven by record mobile processor sales and continued share gains, while gaming revenue declined 31% to $779 million, primarily because of lower semi-custom sales during the console cycle. Ryzen PRO sales increased more than 50% year over year as commercial adoption expanded. AMD expects a softer PC market in the second half as higher memory and component costs pressure demand, though the company expects its client business to outperform the broader market. Embedded revenue increased 19% year over year and 12% sequentially to $977 million, representing the segment's strongest growth in more than three years, with strength in networking, aerospace and defense, test and measurement, emulation and communications. AMD is tracking toward more than $18 billion in new embedded design wins this year.

For the third quarter of 2026, AMD forecast revenue of approximately $13 billion, plus or minus $300 million, representing 41% year-over-year growth at the midpoint and approximately 13% sequential growth. Non-GAAP gross margin is expected to be approximately 56%, and non-GAAP operating expenses are projected at approximately $3.65 billion. AMD expects strong double-digit sequential growth in both data center and embedded revenue, while the company expects a modest sequential decline in client and gaming revenue. Su said the company now expects revenue growth to substantially exceed its prior long-term target of more than 35% and expects to significantly exceed its previously stated $20 annual earnings-per-share target within its strategic timeframe.