AMD reports Q2 earnings beating expectations, but stock dips in extended trading

Advanced Micro Devices reported second-quarter earnings on Tuesday that beat expectations, but the stock slumped in extended trading after rising during regular trading hours.

Here's how the chipmaker did versus LSEG consensus estimates for the quarter ended June 27:

EPS: $1.66, adjusted, versus $1.62 expected

Revenue: $11.54 billion versus $11.28 billion expected

Overall, AMD revenue climbed 50% from $7.69 billion a year ago, a sign of the company's central position in the market for artificial intelligence chips.

AMD's Data Center unit is what is driving the company's growth. Data Center sales were $6.7 billion, up 107% on an annual basis, which the company attributed to central processing unit and graphics processing unit sales.

The chipmaker's stock has nearly tripled over the past year, both on optimism that its AI chips, branded Instinct, will take a meaningful amount of a growing market from Nvidia , as well as the resurgence of the CPU — which AMD sells under the brand name Epyc — which AI experts now say is an essential component for running agents.

AMD said it expects about $13 billion in revenue for the current quarter, plus or minus $300 million, versus LSEG expectations of $12.52 billion. Some analysts had been looking for guidance as high as $14 billion.

In July, AMD raised its expectations for the size of the semiconductor industry, saying it could be worth $2 trillion per year by 2028. The chipmaker sees $1.4 trillion of that coming from AI accelerators, or GPUs, up from a previous estimate of $500 billion by 2028.

The company will also start shipping Helios, its first rack AI system, this quarter to companies like Meta , OpenAI , and Oracle . It's AMD's first rack-scale system, using its CPUs, GPUs, and networking chips, which directly competes with Nvidia's complete systems, not just its chips. AMD said on Tuesday that it expected Helios shipments to ramp up in the fourth quarter.

"We expect Data Center sales to accelerate in the second half of 2026, driving stronger overall revenue growth and continued earnings expansion," AMD CFO Jean Hu said in a statement.

On an earnings call with analysts, AMD CEO Lisa Su said that the company expects its data center sales to double in 2027, and that server revenue will up more than 80% on an annual basis in the second half of the company's fiscal 2026.

"Demand for both accelerators and CPUs is growing well above our prior expectations," Su said.

Su added on the earnings call that the company's CPU business has taken market share during the quarter. AMD's main CPU rival is Intel.

"Hyperscalers continued expanding Epyc across their internal infrastructure and public cloud offerings, including AWS, Microsoft, Google, Oracle, and others," Su said.

AMD's business selling CPUs and GPUs for consumer devices like laptops and consoles, called client and gaming, was only up 6% year-over-year to $3.8 billion. Its embedded segment, which includes chips for industrial purposes, grew 19% on an annual basis to $977 million.

The company said it spent $808 million on capital expenditures, a steep increase from $282 million in the year-ago period and $389 million in the March quarter.

"Our first half performance has been very strong and although we are expecting that the market will decline in the second half, the market has actually held up better than most people would have thought," Su said about the company's PC business.

AMD reported $2.3 billion in net income, or $1.38 per diluted share, versus $872 million in net income, or 54 cents per diluted share in the year-ago period.