Advanced Micro Devices beat second-quarter estimates with revenue up 50% and data center sales doubling year-over-year, but shares fell roughly 8% after hours as some investors had anticipated stronger forward guidance.
Advanced Micro Devices reported second-quarter earnings on Tuesday that topped Wall Street estimates on both the top and bottom lines, yet shares fell roughly 8% in after-hours trading, underscoring the elevated expectations investors have built around the chipmaker's AI ambitions.
AMD posted adjusted earnings per share of $1.66 on revenue of $11.54 billion for the quarter ended June 27, compared with LSEG consensus estimates of $1.62 per share and $11.28 billion. Net income reached $2.3 billion, or $1.38 per diluted share, versus $872 million, or 54 cents per diluted share, in the year-ago period.
Overall revenue rose 50% from $7.69 billion a year earlier, reflecting the company's deepening presence in the market for artificial intelligence chips.
The Data Center segment drove the bulk of that growth. Sales from the unit came in at $6.7 billion, up 107% on an annual basis, driven by demand for both central processing units and graphics processing units. AMD sells AI-focused GPUs under the Instinct brand and server CPUs under the Epyc name.
"Demand for both accelerators and CPUs is growing well above our prior expectations," CEO Lisa Su said on the company's earnings call with analysts. Su added that AMD's CPU business gained market share during the quarter, with hyperscalers — including AWS, Microsoft, Google, and Oracle — continuing to expand Epyc across internal infrastructure and public cloud offerings.
For the third quarter, AMD guided for approximately $13 billion in revenue, plus or minus $300 million, compared with LSEG expectations of $12.52 billion. Some analysts had been looking for guidance as high as $14 billion, which may have contributed to the stock's post-market slide.
Su also told analysts that AMD expects its data center sales to double again in 2027, and that server revenue will grow more than 80% on an annual basis in the second half of fiscal 2026. "We expect Data Center sales to accelerate in the second half of 2026, driving stronger overall revenue growth and continued earnings expansion," CFO Jean Hu said in a statement.
AMD's other business lines showed more modest results. The client and gaming segment — which covers chips for laptops and gaming consoles — rose just 6% year-over-year to $3.8 billion. The embedded segment, which includes chips for industrial applications, grew 19% annually to $977 million.
Capital expenditures came in at $808 million for the quarter, up sharply from $282 million in the year-ago period and $389 million in the March quarter.
The company also announced that it will begin shipping Helios — its first rack-scale AI system — this quarter to customers including Meta, OpenAI, and Oracle. Helios integrates AMD's CPUs, GPUs, and networking chips into a single system, placing it in direct competition with Nvidia's complete rack offerings rather than just individual chips. AMD said Helios shipments are expected to ramp up in the fourth quarter.
In July, AMD raised its long-range forecast for the semiconductor industry, projecting the market could reach $2 trillion per year by 2028, with $1.4 trillion of that attributable to AI accelerators — up from a prior estimate of $500 billion by 2028.
AMD's stock has nearly tripled over the past year, a run built on optimism that its Instinct GPU line will capture meaningful share from Nvidia and that the resurgence of the CPU — now considered an essential component for running AI agents — will sustain demand. Whether Tuesday's guidance range is sufficient to keep that momentum intact will likely depend on how Data Center revenue tracks against Su's second-half projections in the quarters ahead.
Marc Sabatini is a staff writer at TechEchelon covering enterprise software, cybersecurity, and the regulatory beats that shape both. He focuses on the deal flow and policy decisions that move markets.
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