Q2 2026 Advanced Micro Devices Inc Earnings Call Transcript
Key Points
- Record revenue and profitability in Q2 2026, with revenue up 50% year-over-year to $11.5 billion, driven by strong adoption of EPYC, Instinct, Ryzen, and embedded processors.
- Data center segment revenue more than doubled year-over-year to a record $6.7 billion, now representing 58% of total revenue, fueled by strong demand for EPYC CPUs and Instinct accelerators.
- Announced a new strategic partnership with Anthropic to deploy up to 2 gigawatts of MI450 series GPUs in Helios, with the first gigawatt deployment beginning in the first half of 2027, and expanded partnership with Microsoft for Helios deployment on Azure.
- Raised long-term market expectations, now projecting the data center AI accelerator market to grow over 45% annually to approximately $1.4 trillion by 2030 and the server CPU market to grow over 50% annually to approximately $220 billion by 2030.
- Expects data center segment revenue to more than double year-over-year in 2027, with server CPU revenue projected to grow over 70% and data center AI business to grow well over 100%.
- Gross margin expanded to 56% in Q2 2026, up over 200 basis points year-over-year, reflecting a favorable product mix and growing contribution from the data center business.
- Embedded segment returned to strong growth, with revenue up 19% year-over-year to $977 million, driven by broad-based demand and new design wins, tracking towards a record year with over $18 billion in new design wins.
- Gaming segment revenue declined 31% year-over-year to $779 million, primarily due to lower semi-custom sales at this stage of the console cycle and higher component costs impacting graphics card demand.
- Client business faces a softer PC market in the second half of 2026 due to higher memory and component costs, which could weigh on demand despite expected outperformance relative to the market.
- Data center AI business gross margins are expected to be slightly below the corporate average, potentially creating a headwind as the business ramps significantly in 2027.
- Server CPU supply chain remains tight in the first half of 2026 due to unforecasted demand, which could limit near-term growth opportunities despite plans to increase capacity.
- The company faces potential challenges in ramping complex new products like Helios, with yields expected to improve over the first few quarters, potentially impacting initial gross margins.
- Operating expenses increased 40% year-over-year to $3.4 billion as the company continues to invest heavily in R&D to support long-term growth, which could pressure near-term profitability.
- Higher industry-wide component costs, particularly memory, are impacting the broader market and could affect AMD's ability to maintain margins and meet customer demand for its products.
Greetings, and welcome to the AMD second quarter 2026 conference call. (Operator Instructions) And please note that this conference is being recorded. I will now turn the conference over to Matt Ramsay, VP, Financial Strategy and IR. Thank you, Matt. You may begin.
Thank you, and welcome to AMD's second quarter '26 financial results conference call. By now, you should have had the opportunity to review a copy of our earnings press release and the accompanying slides. If you have not had the chance to review these materials, they can be found on the investor relations page of amd.com. Today, we will refer primarily to non-GAAP financial measures during the call. The full non-GAAP reconciliations are available in today's press release and slides posted on our website.
As a reminder, our second quarter 2025 results included approximately $800 million of inventory and related charges associated with US export control restrictions on MI308 shipments to
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