Advanced Micro Devices has delivered a record-breaking quarterly financial report, fueled by explosive growth in its data center business and massive purchases from core customers. The company also presented a long-term profitability outlook and market opportunity that exceeded Wall Street expectations.
During the second-quarter fiscal 2026 earnings call, AMD Chair and CEO Lisa Su and CFO Jean Hu communicated strong growth signals to the market. Driven by robust sales of EPYC processors and Instinct accelerators, AMD's second-quarter revenue hit a record $11.5 billion, a 50% year-over-year increase, with diluted earnings per share rising approximately 82% from the prior year.
Against a backdrop of surging demand for AI chips, AMD's management didn't rest on its laurels. Instead, they reshaped the market's perception of the computing chip landscape with a series of powerful data points and a forward guidance that exceeded forecasts. Su set the tone early in the call: "We delivered another outstanding quarter with record revenue and profitability as adoption of our leading products continues to ramp. We are still in the early stages of a multiyear AI adoption cycle."
Data center leads the charge with revenue doubling year-over-year and server market share expanding
As the most closely watched segment by the market, AMD's data center business achieved a qualitative leap in the second quarter. Revenue for the segment grew 107% year-over-year to a record $6.7 billion. More noteworthy for investors is the historic shift in the business mix: data center revenue now accounts for 58% of total revenue, up from 42% a year ago.
On the server CPU (EPYC) front, AMD posted record server CPU revenue for the fifth consecutive quarter, with both cloud and enterprise sales growing over 70% year-over-year. The new sixth-generation EPYC Venice series has entered production. Su stated with strong confidence, "Venice is built on our new Zen 6 core and 2nm technology, delivering over 2x the performance per watt of the leading x86 CPU and 3.3x of the leading ARM CPU. Customer demand for Venice is stronger than for any prior EPYC generation."
In the data center GPU segment, revenue also doubled year-over-year as cloud providers and AI companies expanded their deployments. Demand for the Helios AI rack system is surging, and the company is forging deep ties with major tech giants. Regarding orders and customer expansion, AMD disclosed a highly impressive list of partners and their actual deployment progress. The newly introduced rack-scale AI platform Helios, which combines Venice CPUs, MI450 series GPUs, and other components, has become the core growth driver. "Customer demand for Helios is very strong and is exceeding our initial expectations," Su noted. Beyond multi-gigawatt deployments with OpenAI and Meta, AMD announced a new strategic partnership with Anthropic.
Anthropic will deploy up to 2 gigawatts of MI450 series GPUs in Helios, with the first 1-gigawatt deployment expected to begin in the first half of 2027. Additionally, Microsoft will deploy Helios at scale on Azure. Looking ahead, Su revealed an aggressive product roadmap. "We plan to introduce a new rack-scale AI platform every year. We expect MI500 to deliver the largest generational leap in Instinct history, putting us on track to increase inference performance by more than 2,000x in just four years."
A dramatically expanded total addressable market and long-term EPS target above $20
The most sentiment-boosting information from the call came from management's significant upward revision of the total addressable market (TAM) and the raised guidance. Su remarked, "Overall, the expansion of the overall data center market opportunity is happening much faster than we anticipated just six months ago. As AI enters production environments for a broader range of applications and workloads, demand for both accelerators and CPUs is far exceeding our prior expectations."
AMD provided updated, massive market forecasts. The data center AI accelerator market is expected to grow at a compound annual growth rate (CAGR) of over 45% to approximately $1.4 trillion by 2030. The server CPU market is projected to grow at a CAGR of over 50% to approximately $220 billion by 2030. The overall high-performance and AI computing market is seen growing at a CAGR of about 40% in the coming years, approaching $2 trillion by 2030.
Based on this, AMD issued guidance that surpassed expectations. It forecasts server revenue growth of over 80% year-over-year in the second half of 2026, and on a higher base, over 70% growth for the full year 2027. It also expects the data center segment revenue in 2027 to "more than double" year-over-year. On the financial model, Su delivered a key statement. "As a result, we are significantly exceeding the long-term financial model we shared last November. We now expect revenue to substantially surpass our previous growth target of over 35%, and we anticipate significantly exceeding the annual EPS target of $20 within our strategic time frame."
Client and embedded segments show steady recovery, offsetting a decline in gaming
Beyond data center, other business segments showed mixed results. Due to lower semi-custom sales, gaming revenue fell 31% year-over-year to $779 million. This gap was filled by a recovery in the client and embedded segments. Client segment revenue grew 23% year-over-year to $3.1 billion in the second quarter. Embedded segment revenue increased 19% year-over-year to $977 million, its strongest growth in over three years. Hu pointed out that the significant recovery in the embedded business will provide an additional boost to the company's gross margin in 2027. She added that future operating expenditure growth will be kept below the rate of revenue growth to drive more operating leverage for EPS expansion.
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