AMD revenue jumps 50% as data-center sales more than double, but shares fall
Advanced Micro Devices reported second-quarter results on Tuesday, beating expectations for revenue and profit while providing guidance for the current quarter that was described as in line with expectations. The chipmaker makes both data-center CPUs and GPUs, two categories of AI chips that are driving its growth. Sales in the business unit more than doubled from a year earlier. AMD's stock fell sharply in after-hours trading despite rising during the regular session. For the quarter ended June 27, AMD reported adjusted earnings per share of $1.66, versus the LSEG consensus estimate of $1.62, and revenue of $11.54 billion, compared with expectations of $11.28 billion. Overall, AMD's revenue rose 50% from $7.69 billion a year earlier, underscoring the company's position in the artificial-intelligence chip market. Data-center sales were $6.7 billion, up 107% from a year earlier. AMD attributed the increase to sales of its central processing units, or CPUs, and graphics processing units, or GPUs. AMD's stock has nearly tripled over the past year. The rise has reflected optimism that its Instinct-branded AI chips will capture a meaningful share of the market from Nvidia, as well as a recovery in its CPU business. AMD sells those CPUs under the Epyc brand, and AI specialists now view them as key components for running AI agents. AMD expects current-quarter revenue of about $13 billion, plus or minus $300 million, compared with the LSEG consensus estimate of $12.52 billion. Some analysts had previously expected guidance as high as $14 billion. In July, AMD raised its outlook for the size of the semiconductor industry, saying it could reach $2 trillion in annual revenue by 2028. The company expects $1.4 trillion of that total to come from AI GPUs, up from its previous estimate of $500 billion by 2028. AMD also will begin shipping Helios, its first rack-scale AI system, this quarter to companies including Meta, OpenAI and Oracle. The system combines AMD's CPUs, GPUs and networking chips and competes directly with Nvidia's full systems rather than only with its chips. AMD said Tuesday that Helios shipments are expected to accelerate in the fourth quarter. “We expect data-center sales to accelerate in the second half of 2026, driving stronger overall revenue growth and continued expansion in profitability,” AMD Chief Financial Officer Jean Hu said in a statement. On a call with analysts, AMD Chief Executive Lisa Su said the company expects data-center sales to double in 2027 and server revenue to grow more than 80% year over year in the second half of fiscal 2026. “Demand for both GPUs and CPUs is far beyond what we previously expected,” Su said. She added that AMD's CPU business expanded its market share in the quarter. The source does not provide the name of AMD's main CPU competitor. Su said hyperscale cloud providers continue to expand their use of Epyc in internal infrastructure and public-cloud products, including AWS, one unnamed company and Oracle. AMD's client and gaming business, which sells CPUs and GPUs for consumer devices such as laptops and game consoles, grew 6% from a year earlier to $3.8 billion. Its embedded business, which includes chips for industrial applications, rose 19% to $977 million. The company said capital expenditures were $808 million, well above $282 million a year earlier and $389 million in the March quarter. “We had a very strong first half, and while we expected the market to decline somewhat in the second half, the market has performed better than most people expected,” Su said, referring to AMD's PC business. AMD reported net income of $2.3 billion, or $1.38 per diluted share, compared with net income of $872 million, or 54 cents per diluted share, a year earlier.
For the quarter ended June 27, AMD reported adjusted earnings per share of $1.66, versus the LSEG consensus estimate of $1.62, and revenue of $11.54 billion, compared with expectations of $11.28 billion.
Overall, AMD's revenue rose 50% from $7.69 billion a year earlier, underscoring the company's position in the artificial-intelligence chip market. Data-center sales were $6.7 billion, up 107% from a year earlier. AMD attributed the increase to sales of its central processing units, or CPUs, and graphics processing units, or GPUs.
AMD's stock has nearly tripled over the past year. The rise has reflected optimism that its Instinct-branded AI chips will capture a meaningful share of the market from Nvidia, as well as a recovery in its CPU business. AMD sells those CPUs under the Epyc brand, and AI specialists now view them as key components for running AI agents.
AMD expects current-quarter revenue of about $13 billion, plus or minus $300 million, compared with the LSEG consensus estimate of $12.52 billion. Some analysts had previously expected guidance as high as $14 billion.
In July, AMD raised its outlook for the size of the semiconductor industry, saying it could reach $2 trillion in annual revenue by 2028. The company expects $1.4 trillion of that total to come from AI GPUs, up from its previous estimate of $500 billion by 2028.
AMD also will begin shipping Helios, its first rack-scale AI system, this quarter to companies including Meta, OpenAI and Oracle. The system combines AMD's CPUs, GPUs and networking chips and competes directly with Nvidia's full systems rather than only with its chips. AMD said Tuesday that Helios shipments are expected to accelerate in the fourth quarter.
“We expect data-center sales to accelerate in the second half of 2026, driving stronger overall revenue growth and continued expansion in profitability,” AMD Chief Financial Officer Jean Hu said in a statement.
On a call with analysts, AMD Chief Executive Lisa Su said the company expects data-center sales to double in 2027 and server revenue to grow more than 80% year over year in the second half of fiscal 2026.
“Demand for both GPUs and CPUs is far beyond what we previously expected,” Su said. She added that AMD's CPU business expanded its market share in the quarter.
The source does not provide the name of AMD's main CPU competitor. Su said hyperscale cloud providers continue to expand their use of Epyc in internal infrastructure and public-cloud products, including AWS, one unnamed company and Oracle.
AMD's client and gaming business, which sells CPUs and GPUs for consumer devices such as laptops and game consoles, grew 6% from a year earlier to $3.8 billion. Its embedded business, which includes chips for industrial applications, rose 19% to $977 million.
The company said capital expenditures were $808 million, well above $282 million a year earlier and $389 million in the March quarter.
“We had a very strong first half, and while we expected the market to decline somewhat in the second half, the market has performed better than most people expected,” Su said, referring to AMD's PC business.
AMD reported net income of $2.3 billion, or $1.38 per diluted share, compared with net income of $872 million, or 54 cents per diluted share, a year earlier.