How will the mix shift between server CPUs (accretive) and data center AI (slightly below corporate average) impact gross margins in 2027?

Server CPU expansion is accretive to gross margin. Data center AI ramp, while slightly below corporate average, adds tremendous revenue and gross profit. The mix will determine the overall trajectory, but the Embedded business recovery will provide an additional tailwind. Management feels good about navigating the transition and improving gross margin. “The gross margin is slightly below copper average. I think the mix will determine how we go through 2027. But overall, we actually feel good about how we can really navigate through the transition of the business and continue to improve our gross margin to manage the balance of the gross margin plus our Embedded business is recovering significantly. We actually think the Embedded business will give us additional tailwind on the gross margin side in 2027.”

How many gigawatts of compute does AMD have line of sight into for 2027, and what is the monetization per gigawatt?

The server CPU business will grow over 70% YoY in 2027, and the overall data center segment will more than double due to data center AI ramping. Helios ramp is significant, starting Q3, stepping up in Q4, and further in Q1 2027. Revenue per gigawatt is still in the "double-digit billions" range. Supply is available to meet guidance, with potential for upside. “From an overall data center standpoint, I think we have given a little bit of color on 2027, we believe that the server CPU portion of our data center business will grow by over 70% year-over-year off of a higher base. And we believe the overall segment will grow by over 100%, so we'll more than double due to the data center AI ramping.”

How should investors model server CPU growth, considering unit and ASP assumptions, and the ability of the supply chain to support it?

Q2 server CPU growth (over 70%) was driven by double-digit growth in both units and ASPs, with units being higher. Going forward, both unit and ASP growth are expected. AMD has been diligently working to raise overall server capacity across the supply chain (wafers, back-end, substrates) to meet strong demand, which supports the H2 FY26 guidance raise and 2027 growth. “If you just look at our Q2 performance, when we said we grew over 70% in both cloud and enterprise, we actually had double-digit growth in both units and ASPs, but it was actually more unit. The unit growth was higher.”

AMD

Advanced Micro Devices (AMD) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Information Technology· Aug 4, 2026

Source: earnings call transcript

Executive summary

Advanced Micro Devices, Inc. Q2 FY26 — Record Revenue and Data Center Growth

AMD delivered record Q2 FY26 results, driven by strong demand for EPYC and Instinct products, with Data Center revenue more than doubling and now representing 58% of total revenue. The company is capitalizing on the expanding AI market opportunity, expecting significant growth in both server CPUs and data center AI accelerators through 2027. While the gaming segment faced headwinds, AMD anticipates outperforming the softer PC market in the second half, maintaining a positive outlook on its long-term financial model.

Highlights

Achieved record revenue of $11.5 billion, representing a 50% year-over-year increase.
Data Center revenue more than doubled year-over-year to a record $6.7 billion, now comprising 58% of total revenue.
Diluted earnings per share increased approximately 82% year-over-year on a comparable basis.
Gross margin expanded to 56%, up over 200 basis points year-over-year.
Server CPU revenue grew over 70% year-over-year in both cloud and enterprise, with record sell-through.

Concerns

Gaming revenue declined 31% year-over-year to $779 million, primarily due to lower semi-custom sales and higher component costs.
A softer PC market is anticipated in the second half of 2026 due to higher memory and component costs weighing on demand.
Client and Gaming segment operating income decreased to $582 million (15% of revenue) compared to $767 million (21%) a year ago.

Guidance & targets

Category	Target	Timeline	Confidence
Revenue	$13 billion plus or minus $300 million high materiality	Q3 · FY26	High
Non-GAAP Gross Margin	approximately 56% medium materiality	Q3 · FY26	High
Non-GAAP Operating Expenses	approximately $3.65 billion medium materiality	Q3 · FY26	High
Non-GAAP Other Income and Expense	gain of approximately $55 million low materiality	Q3 · FY26	High
Non-GAAP Effective Tax Rate	13% low materiality	Q3 · FY26	High
Diluted Share Count	approximately 1.66 billion shares low materiality	Q3 · FY26	High
Server Revenue Growth	more than 80% year-over-year high materiality	H2 FY26	High
Server Revenue Growth	more than 70% for the full year 2027 high materiality	FY27	High
Data Center Segment Revenue Growth	more than double year-over-year high materiality	FY27	High
Long-term Revenue Growth	substantially above our prior target of greater than 35% high materiality	Long-term	High
Long-term Annual EPS	significantly exceed our $20 annual EPS target high materiality	Long-term	High
Data Center AI Accelerator Market Growth	more than 45% annually to approximately $1.4 trillion high materiality	by 2030	High
Server CPU Market Growth	more than 50% annually to approximately $220 billion high materiality	by 2030	High
Overall High Performance & AI Computing Market Growth	approximately 40% annually over the next several years, approaching $2 trillion high materiality	by 2030	High
Company Revenue Growth vs Market	grow well above the market high materiality	Next several years	High
Operating Expenses Growth	less than the top line revenue growth medium materiality	Next few years	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Data Center Driven by strong demand for EPYC processors (record enterprise sell-through, robust cloud demand) and Instinct accelerators (MI350 Series ramp, adoption across AI labs, cloud providers, start-ups, national labs, sovereign AI). EPYC sales growth: >70% YoYInstinct sales growth: >100% YoY	$6.7 billion	107%	16%	$2.1 billion (31% of revenue)
Client and Gaming Overall segment growth driven by Client business strength, partially offset by Gaming decline. Operating income decreased YoY from $767 million (21% of revenue) a year ago, reflecting continued investment in go-to-market activities and product roadmap.	$3.8 billion	6%	7%	$582 million (15% of revenue)
Client Led by record mobile revenue and continued share gains. Ryzen Pro sales grew >50% YoY in commercial adoption. Mobile processor revenue: record	$3.1 billion	23%	6%	—
Gaming Primarily due to lower semi-custom sales at this stage of the console cycle and declining gaming graphics revenue (higher component costs, higher prices, weighed on demand). Sequential growth driven by higher semi-custom sales, partially offset by lower Radeon shipments.	$779 million	-31%	8%	—
Embedded Strongest growth in over 3 years, broad-based demand across networking, aerospace and defense, test measurement, emulation, and communication. Embedded x86 business grew significantly. Operating income improved from $275 million (33% of revenue) a year ago due to higher revenue and favorable product mix. New design wins: >$18 billion	$977 million	19%	12%	$386 million (40% of revenue)

AMD operating KPIs by quarter

AMD operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
EPYC-powered cloud instances	1,600+ EPYC-powered cloud instances increased nearly 50% year-over-year to more than 1,600 with instances optimized for virtually every enterprise workload and expanded availability across the largest global cloud providers. Source: earnings call transcript	1,600+ Fifth-gen EPYC Turin now powers nearly 1/3 of the more than 1,600 EPYC public cloud instance types available globally as providers broaden their offerings with new database storage and AI workloads. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Helios rackscale AI platform	launch	Initial shipments on track to begin later this quarter (Q3 FY26) and ramp through Q4 and into 2027
Sixth-gen EPYC Venice family	launch	In production now, deployments beginning later this year
MI500 series GPUs (next-generation platform)	roadmap	2027
ROCm.ai	launch	Last month
Ryzen AI Halo platform (Gorgon Halo processor)	launch	Introduced in July
Ryzen AI embedded x100 processors	launch	Q2 FY26
Kria AI robotics platform	launch	Q2 FY26

Deals & partnerships

Anthropic Strategic partnership for deployment of MI450 series GPUs in Helios and multiyear joint engineering collaboration. up to 2 gigawatts of MI450 series GPUs multiyear

Includes a multiyear joint engineering collaboration using Claude to optimize workloads for Instinct GPUs and accelerate ROCm software development.

Microsoft Expanded partnership for deployment of Helios at scale on Azure for frontier model inferencing.

Deployment for Microsoft, its AI customers, and Azure AI services.

Hugging Face Partnership to include 1 year of Hugging Face Pro with every Ryzen AI Halo system. 1 year

To make it easier for developers to build and test large AI models locally.

Cerebras Partnership on disaggregated compute for the fast inference market.

Combines Helios with Cerebras' wafer scale engine to provide a solution for customers. Solution expected to become available in Q4 in the Cerebras cloud and extend into 2027.

Risks & headwinds

Gaming segment decline Q2 FY26

declined 31% year-over-year to $779 million

Softer PC market second half of 2026

higher memory and component costs weigh on demand

Mitigation:Expects client business to perform better than the market, driven by Ryzen portfolio strength and growing commercial adoption.

What to watch in Q3 FY26

Helios ramp and customer deployments

Q4 FY26 / Q1 FY27

Current Initial shipments on track to begin later this quarter (Q3 FY26)

Target Substantial ramp in Q4 FY26 and further step-up in Q1 FY27

Why it matters

Helios is a key driver for significant growth in the data center AI business, with strategic customer commitments.

Helios is now in production with initial shipments on track to begin later this quarter and ramp through the fourth quarter and into 2027 to meet very strong customer demand.

Find out whether AMD delivers this. Inve re-checks your case every morning.

Q&A highlights

When will data center GPU revenue surpass CPU revenue, and which will be a stronger dollar contributor in 2027?

Both server CPU and data center AI will grow very strongly. Server CPU will grow over 80% in H2 FY26 and over 70% in FY27. Data center AI TAM is larger, and with strategic customer ramps, it's expected to drive substantial growth in 2027, leading to the overall data center segment more than doubling.

“The data center AI TAM is certainly larger. And as a result, as we ramp the large strategic customers that we have on Helios in 2027, you would expect substantial growth in that business in 2027. But both businesses are very significant drivers of our 2027 growth and beyond.”

asked by Tom O'Malley · answered by Lisa Su

2 min read 6 chapters

Detailed narrative

AI Market Expansion and AMD's Position

AMD significantly raised its market opportunity estimates for data center AI accelerators to $1.4 trillion by 2030 (up from prior expectations) and server CPUs to $220 billion by 2030, both projected to grow over 45-50% annually. The overall high-performance and AI computing market is now projected to reach $2 trillion by 2030, growing approximately 40% annually, with AMD expecting to outgrow the market.

This expanded opportunity, combined with product strength and growing customer visibility, is creating a steeper growth trajectory for AMD's data center business.

EPYC Venice Launch and Adoption

The sixth-gen EPYC Venice family, built on the all-new Zen 6 core and 2-nanometer technology, is now in production. Venice extends EPYC leadership in performance and efficiency, delivering over twice the performance per watt of leading x86 CPUs and up to 3.3x that of leading ARM-based CPUs.

Over 230 fifth-gen EPYC platforms are in market, and customer demand for Venice is stronger than any prior EPYC generation, with OEMs launching platforms and cloud providers planning deployments beginning later this year.

Helios AI Platform and Strategic Partnerships

AMD launched Helios, a rackscale AI platform combining EPYC Venice CPUs, MI450-Series GPUs, Pensando networking, and ROCm software. Helios delivers up to 15% more throughput and 30% more tokens per dollar than competitors for inferencing workloads. New strategic partnerships include Anthropic, which will deploy up to 2 gigawatts of MI450 series GPUs in Helios starting H1 2027, and Microsoft, which will deploy Helios at scale on Azure.

Initial Helios shipments are on track to begin later this quarter and ramp through Q4 FY26 and into 2027.

ROCm Software Ecosystem Maturity

The ROCm software stack has reached an important inflection point, providing the performance, capabilities, and developer experience needed for AI deployment at scale. Over 3 million models now run out-of-the-box on AMD, and open-source contributions to ROCm have increased more than tenfold over the past year.

AMD also introduced ROCm.ai, an AI-assisted development platform, which delivers over twice the training performance and 3x inferencing performance of ROCm 7.

Client Business Resilience and AI PCs

Despite an expected softer PC market in H2 FY26 due to higher memory and component costs, AMD anticipates its client business will outperform the market. This is driven by the strength of its Ryzen portfolio, including Ryzen Pro sales growing over 50% YoY and the introduction of Ryzen AI Pro 400 series processors.

The new Gorgon Halo processor for the Ryzen AI Halo platform features an industry-leading 192 gigabytes of unified memory and can run models with up to 300 billion parameters, signaling AMD's focus on AI PCs.

Comparability Note

Second quarter 2025 results included approximately $800 million of inventory and related charges associated with U.S. export control restrictions on MI308 shipments to China. Unless otherwise noted, comments making year-over-year comparisons exclude the impact of those charges to provide a more comparable and meaningful view of underlying business performance.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.