Advanced Micro Devices (NASDAQ:AMD) delivered a strong Q2 performance that beat consensus estimates on both the top and bottom lines, reporting record total revenue of $11.54 billion, up 50% year over year, against expectations of roughly $11.34 billion. The company posted EPS of $1.66, topping analyst projections of $1.62.
Growth was overwhelmingly powered by the Data Center AI segment, which surged 107% year over year to $6.7 billion on robust demand for EPYC processors and Instinct GPUs. The Client segment also delivered solid results, rising 23% year over year to $3.1 billion on strong Ryzen sales. That momentum was partially offset by a weaker Gaming business, which fell 31% year over year to $779 million, driven primarily by lower semi-custom (console) demand. Meanwhile, the Embedded segment grew 19% year over year to $977 million as broader end-market demand strengthened.
Despite the top-line and bottom-line beat, analyst attention centered heavily on gross margin dynamics and long-term segment mix. Management reiterated ambitious long-term market forecasts, projecting the server CPU total addressable market to exceed $220 billion by 2030 and the Data Center AI market to reach $1.4 trillion by the same year. Near-term, however, margin questions remained front and center: Currently, Data Center AI hardware carries lower gross margins than the corporate average, largely because rack-scale systems like Helios rely heavily on High Bandwidth Memory (HBM), which remains tightly supplied. On the topic, CEO Lisa Su said AMD has been co-planning with memory suppliers and that its HBM allocations for 2027 are largely locked in, giving the company visibility to support the ramp and the costs.
Looking ahead, management outlined an aggressive acceleration into the back half of the year. Management described server revenue growth of more than 80% for the second half of 2026, though the exact framing (year over year versus first-half comparison) was confusing. Management indicated Data Center sales could roughly double in 2027 as the Helios/MI450 ramp broadens across major strategic customers, including Anthropic and Microsoft. Still, caution is warranted as management flagged a softer PC market heading into the second half amid elevated system costs and were evasive when answering questions about gross margins. Several analysts on the call pushed on gross margin trajectory but management only offering directional color.
Here is the high-level summary card covering key figures and guidance.
