‘We now expect revenue to grow substantially above our prior target of greater than 35 percent,’ says AMD Chair and CEO Lisa Su.
Growing demand for AMD’s accelerators and CPUs for artificial intelligence workloads and data centers—not to mention AMD’s ability to navigate increased component prices and tight supply—gave the vendor’s leaders confidence to its revenue outlook.
“We now expect revenue to grow substantially above our prior target of greater than 35 percent,” Lisa Su, chair and CEO of the Santa Clara, Calif.-based semiconductor maker, said Tuesday on AMD’s latest quarterly earnings call, covering its second fiscal quarter, the three months ended June 27.
AMD now expects the data center AI accelerator market to grow more than 55 percent annually to about $1.4 trillion by 2030 and the server CPU market to grow more than 50 percent annually to about $220 billion by 2030.
“We are still in the early innings of a multiyear AI adoption cycle, and the opportunity ahead is enormous,” she continued. “We are exceptionally well positioned to capitalize on this opportunity and deliver significant growth in the coming years.”
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AMD Raises Revenue Outlook On Strong AI Demand
Dominic Daninger, vice president of engineering at Burnsville, Minn.-based systems integrator Nor-Tech, told CRN in a recent interview that he is taking note of increased AMD partner coverage with a new AMD sales representative providing additional assistance to his company.
“He obviously handles a lot of the areas that we have most of our business in, and he’s been helpful,” he said.
AMD’s 2026 partner program goals have included on-boarding about 500-plus qualified partners and making MDF and co-op funds available to more partners beyond just the top tier or those having received funding in the past, according to CRN’s 2026 Partner Program Guide.
Su also said on the call that AMD sees the overall market for high-performance AI computing growing about 40 percent annually over the next several years, approaching $2 trillion by 2030.
“We expect to grow well above the market,” she said.
Data Center Revenue Doubles On AI Accelerator Traction
Although accelerators present a $1.4 trillion total addressable market (TAM), Su said that “both businesses are very significant drivers of our 2027 growth and beyond.”
AMD now expects its data center segment revenue to more than double year over year in 2027.
During the latest fiscal quarter, the data center segment brought in $6.7 billion, a record amount and more than double year over year. The segment grew 16 percent quarter on quarter and now represents 58 percent of AMD’s total revenue, up from 42 percent a year ago.
“The overall data center market opportunity is expanding far more rapidly than we projected just six months ago,” Su said.
The segment saw its fifth consecutive quarter of record server CPU revenue, with cloud and enterprise sales each growing more than 70 percent year on year, exceeding AMD’s forecast.
The enterprise business saw record sales and the fourth consecutive quarter of sales growth, with on-premises adoption growing, Su said.
Sales of AMD’s Instinct server-grade, data center GPU accelerators more than doubled year on year. Su said AMD saw double-digit growth in unit price and average selling price (ASP) in the segment, with unit sales growth exceeding ASP’s growth. AMD usually sees higher ASP growth with higher core count sales.
Su told analysts on the call that AMD has seen strong compute market demand in data center accelerators and server CPUs. She expects continued strong growth in the third and fourth quarters.
The data center business’ operating income was $2.1 billion, 31 percent of revenue, according to AMD.
As a signal of AMD’s power in the AI market, the vendor disclosed that more than 3 million AI models now run out of the box on its portfolio. Open-source contributions to Radeon Open Compute have increased more than tenfold over the past year, according to AMD.
AMD Targets Massive Growth In Server CPU Market
Su identified a $220 billion TAM in the server market in 2030 and said on the call that the agentic AI segment is the fastest-growing piece of the market and largest over the next three to five years—but the smallest piece today.
The CEO wants AMD to dominate per-core performance, overall socket performance and other measures that give the vendor “a very strong position across general-purpose agentic AI and also the head nodes for the AI accelerator business.”
AMD’s sixth-generation Venice Epyc server processor family is in production now with every major OEM on track to launch platforms and leading cloud providers planning deployments starting later this year, Su said.
AMD is seeing users run more workloads on its Venice chip compared with the predecessor Turin chip. And she expects more workloads to run on the next generation of Epyc than the previous.
“That’s what gives us the confidence to say that we can grow substantially ahead of the market given the product positioning,” Su said.
Epyc Sales Shine In Quarter
AMD CFO Jean Hu attributed the growth in part to a more than 70 percent year-over-year increase in Epyc computer processor sales.
Epyc Turin now powers nearly one-third of the more than 1,600 Epyc public cloud types available globally. Providers have been broadening their offerings with new database storage and AI workloads.
More than 230 fifth-generation Epyc platforms are now in market from HPE, Dell Technologies, Lenovo and other vendors.
Ryzen Pro, Embedded Business Deliver Additional Growth
AMD’s client business revenue grew 23 percent year on year to $3.1 billion, up 6 percent quarter on quarter. Hu attributed the growth to record mobile revenue.
The vendor’s Ryzen Pro—business-class versions of its standard Ryzen CPUs—saw sales grow more than 50 percent year over year during the quarter.
Su said to expect a softer PC market in the second half of the year due to higher memory and component costs compared with demand. But she still expects AMD’s client business to beat the market and predicts that local AI will grow in share as time goes on.
AMD still forecasts overall AI PC market growth in 2026 year on year, with AMD’s portfolio mix supporting growth in notebook, desktop and other AI-centric PC markets.
“The market’s actually held up better than most people would have thought,” Su said on the call, noting that its growth hinges on the cost of components over the next couple of quarters.
“I remain optimistic about the PC market as an important way for us to reach a broader set of users and our ability to grow ahead of the market,” Su said.
CFO Hu said that AMD’s embedded business “is recovering significantly,” with its revenue from the quarter of $977 million marking a 19 percent increase year on year and the business’ strongest growth in more than three years.
The embedded business saw growth in networking; aerospace and defense; test, measurement and emulation; and communications.
Although she didn’t break out numbers, Su said that the embedded x86 computer processor business “grew significantly in the quarter”
“The strategy we have been executing over the last few years is now delivering strong results,” she said. “Embedded x86 is becoming a significant growth driver for the segment. Our overall embedded portfolio is outgrowing the market and gaining share, and our embedded semi-custom engagements are expanding.”
The embedded business’ operating income was $386 million, 40 percent of revenue. That number a year ago was $275 million, 33 percent of revenue.
Supply Constraints Remain
Asked on the call about the memory cost inflation and supply crisis, Su said that AMD has partnered with memory providers for years to ensure visibility into High Bandwidth Memory allocation to meet delivery expectations for 2027.
She also said that AMD’s portfolio differentiates itself through modifying memory footprints for users whose TCO is not as significant in certain workloads.
“The benefit of the memory is workload-dependent, and we know a bunch of our customers are very, very happy with what that returns in terms of performance,” she said. “There are some workloads of, call it ‘medium-sized’ models, that may not get as much of a benefit. And in that case, we would address the memory footprint as you might expect.”
Su credited AMD’s fast thinking in supply chain with meeting server demand as it reached an inflection point over the past couple of quarters, making sure that the vendor didn’t get caught without enough wafers, back-end capacity, substrate and other components. Another differentiator for AMD during this supply crunch is in how the vendor uses chiplet technology and ramps in fewer wafers in its new node, Su said.
Su reiterated the vendor’s expected revenue per gigawatt in the double-digit-millions-of- dollars range.
“The key here will be continuing to work with our partners as they ramp because there’s a demand for a lot more compute, and we would like to satisfy that demand,” Su said.
The CEO said the server CPU supply chain has been tight throughout the first half of the year “because much of this demand was unforecast.”
Su said that “demand is better forecast” going into 2027, with AMD expecting improved supply to satisfy 70-plus percent growth year on year.
“We’re working very hard on ensuring that we get the supply necessary to meet the very strong customer demand,” Su said. “We feel good about where we are to satisfy both the strong ramp in servers as well as the strong ramp in the data center AI business.”
Early Momentum In Helios, Fast Inference
The ramp of AMD’s Helios integrated, rack-scale AI infrastructure is just starting at the end of the vendor’s third quarter, with more substantial growth expected in the fourth quarter and beyond.
Helios was ahead of AMD demand forecasts for 2027.
“What we’re seeing from every one of our customers who’s had a chance to not only spend time with Helios but also spend time in our over overall ecosystem, there’s a high confidence that Helios will be a great addition to the AI portfolio, particularly around inference,” Su said.
Su expects the inference market to grow “very substantially” over this year into next, with fast inference becoming more relevant and fueling AMD’s recent partnership with Cerebras. The companies’ joint offer should become available in Cerebras’ cloud in the fourth quarter and extend into 2027
“We continue to look at ways to, I would say, customize and optimize our technologies for the various workloads out there,” she said. “We view this as just more of what we do in an open ecosystem.”
AMD Q2 Financial Results: Revenue, Profit, Margin Breakdown
AMD brought in $11.5 billion in revenue during the quarter, up 50 percent year on year and 13 percent quarter on quarter, according to the vendor.
This marked AMD’s sixth consecutive quarter of greater than 30 percent year-over-year revenue growth.
AMD’s growth numbers year over year for the quarter did have the benefit of comparing against $800 million in inventory and related charges from the U.S. applying export controls on AMD Instinct MI308 data center GPU products.
Gross profit doubled year on year to $6.2 billion during the quarter, which marks a 15 percent increase quarter on quarter.
Gross margin of 54 percent marked an increase of 14 percentage points year on year and up 1 point quarter on quarter, according to AMD.
Operating expenses grew 32 percent year on year to $4.2 billion, up 7 percent quarter on quarter. Operating income of $2 billion for the quarter was up 16 times to that of the $134 million loss AMD reported for the same period a year prior. It marked a 35 percent increase quarter on quarter.
Operating margin of 17 percent during the quarter was up 19 percentage points from the 2 percent operating deficit AMD reported for the same period a year ago. It was also 3 points above the 14 percent operating margin AMD reported last quarter.
Net income of $2.3 billion was more than double the net income reported for the same period a year prior and up 66 percent quarter on quarter.
AMD generated $1.6 billion in free cash flow from the quarter.
AMD Forecasts Another Double-Digit Growth Quarter
AMD said to expect third-quarter revenue of about $13 billion plus or minus $300 million. Achieving the midpoint of that revenue range would mark 41 percent in growth year on year and 13 percent quarter on quarter, according to the vendor.
CFO Hu said to expect “very strong” double-digit growth in data center business and strong double-digit growth in the embedded segment.
AMD’s stock traded at about $470 a share Tuesday after market close, down about 9 percent in after-hours trading.
