Advanced Micro Devices NASDAQ: AMD reported first-quarter fiscal 2026 results that management said marked an inflection in growth, driven by accelerating demand for AI infrastructure products across the company’s portfolio. Chair and CEO Lisa Su said revenue rose 38% year-over-year to $10.3 billion, led by record data center results, while diluted non-GAAP earnings per share increased 43% to $1.37. CFO Jean Hu added that free cash flow more than tripled to a record $2.6 billion, or 25% of revenue.
Data center leads results as AI infrastructure demand broadens
Su said data center revenue increased 57% year-over-year to a record $5.8 billion, supported by “significantly higher sales of EPYC CPUs, Instinct GPUs, and Ryzen processors.” She emphasized that data center has become “the primary driver of our revenue and earnings growth,” and argued that AI adoption is lifting demand not only for accelerators but also for the high-performance CPUs that orchestrate those workloads.
Within servers, Su said AMD delivered its “4th consecutive quarter of record server CPU revenue,” with server CPU revenue up more than 50% year-over-year and cloud and enterprise sales each growing more than 50%. She attributed momentum to the ramp of 5th-gen EPYC Turin and continued strength of 4th-gen EPYC processors. Su also said EPYC-powered cloud instances increased nearly 50% year-over-year to more than 1,600.
Management highlighted enterprise traction as well. Su said the company posted record enterprise revenue and record sell-through, with new wins across financial services, healthcare, industrial, and digital infrastructure customers, and noted growing momentum in the mid-market and SMB segments.
AMD raises view of server CPU market opportunity amid “agentic AI”
A central theme of the call was AMD’s updated view of server CPU demand as AI workloads evolve. Su said inferencing and “agentic AI” are increasing the need for CPU compute for orchestration, data movement, and parallel execution, in addition to CPU roles as head nodes for GPUs and accelerators. She said AMD is seeing stronger near-term demand and deeper long-term capacity planning discussions with customers.
At the company’s November Financial Analyst Day, AMD had outlined a server CPU market growing roughly 18% annually over the next three to five years. On the call, Su said AMD now expects the server CPU total addressable market to grow at “greater than 35% annually,” reaching “over $120 billion by 2030,” driven by structural increases in CPU compute requirements from agentic AI.
Su said customer engagement around the upcoming 6th-gen EPYC Venice family is ahead of prior cycles and that AMD remains on track to launch Venice later this year. She described Venice as built on Zen 6 and 2-nanometer process technology, and said the family will include Verano, “our first EPYC CPU purpose-built for AI infrastructure.”
In response to the demand outlook, Su said AMD is working with supply chain partners to “meaningfully increase” wafer and back-end capacity. She said AMD expects server CPU revenue to grow by “more than 70% year-over-year” in the second quarter, with robust growth continuing through the second half of 2026 and into 2027 as next-generation EPYC processors ramp.
Instinct and Helios ramp: Meta partnership highlighted; China transition noted
On the data center AI side, Su said revenue grew “by a significant double-digit percentage year-over-year” as Instinct adoption expands across cloud, enterprise, sovereign, and supercomputing customers, with particular momentum in inference where memory capacity and bandwidth are advantages. She said customers are moving from pilots to large-scale production deployments and that AMD is seeing deeper long-term customer engagements, including multi-generation deployments.
Su pointed to an expanded strategic partnership with Meta to deploy up to 6 gigawatts of AMD Instinct GPUs across several product generations. She said the agreement includes a custom GPU accelerator based on the MI450 architecture, and that shipments are on track to begin in the second half of the year using AMD’s Helios rack-scale architecture, which integrates Instinct GPUs with EPYC Venice CPUs.
During Q&A, Su said AMD’s data center AI revenue was down modestly sequentially in the first quarter due to a “China transition,” with more China revenue in the prior quarter and less in the first quarter. Hu later added that China revenue in the first quarter “is not material.” Su guided to double-digit sequential growth in both server and data center AI in the second quarter and described Helios production shipments ramping in the second half of the year, with “initial volume in Q3” and a “significant ramp in Q4.”
Su said customer pull for Helios is strong and that AMD has begun sampling MI450 series GPUs to lead customers. She also said lead customer forecasts for MI450 now exceed AMD’s initial plans, and noted “additional multi-gigawatt opportunities.” Based on expanded visibility, Su said AMD has “strong and increasing confidence” in delivering “tens of billions of dollars in annual data center AI revenue in 2027” and in exceeding its long-term growth target of greater than 80%.
On software, Su said AMD is improving ROCm performance and scalability and cited MLPerf results where MI355X delivered competitive performance with leadership results in multiple categories. She also said AMD expanded “day zero support” for several leading open models, including Google’s Gemma 4 family, Qwen, and Kimi.
Client, gaming, and embedded results; memory and component costs a second-half factor
Client and gaming segment revenue increased 23% year-over-year to $3.6 billion, with client revenue up 26% to $2.9 billion and gaming revenue up 11% to $720 million. Su said client strength was driven by Ryzen sales and share gains, including commercial momentum. She said sell-through of Ryzen PRO PCs increased more than 50% year-over-year as Dell, HP, and Lenovo broadened AMD offerings, alongside new enterprise wins.
However, Su said the company is planning for second-half PC shipments to be lower due to higher memory and component costs, though AMD still expects client revenue to grow year-over-year and outperform the market. In gaming, Hu said AMD expects second-half gaming revenue to decline “more than 20%” compared to the first half, citing the same cost dynamics and ongoing console-cycle impacts on semi-custom revenue.
Embedded segment revenue rose 6% year-over-year to $873 million. Su said growth was driven by test and measurement and emulation, aerospace and defense, and communications, as well as increased adoption of embedded x86 products. She added that design win momentum grew by a double-digit percentage year-over-year, with “billions of dollars” in new wins.
Margins, cash flow, capital return, and second-quarter outlook
Hu said non-GAAP gross margin was 55% in the first quarter, up 170 basis points year-over-year on favorable mix, and guided to approximately 56% in the second quarter. She said operating expenses were $3.1 billion, up 42% year-over-year, reflecting continued investment in R&D and go-to-market activities. Operating income was $2.5 billion, or a 25% operating margin.
On gross margin trends, Hu said stronger server CPU growth, improving client mix, and embedded momentum are tailwinds, while MI450 is expected to be below corporate average and will be a headwind as it ramps in the second half. She reiterated AMD’s long-term gross margin range of 55% to 58% shared at Financial Analyst Day and said the company believes it is making progress toward that range.
AMD generated $3.0 billion in cash from continuing operations and ended the quarter with $12.3 billion in cash equivalents and short-term investments, Hu said. The company repurchased 1.1 million shares and returned $221 million to shareholders, with $9.2 billion remaining under its repurchase authorization.
For the second quarter, Hu guided revenue of approximately $11.2 billion plus or minus $300 million, implying 46% year-over-year growth at the midpoint. She said AMD expects double-digit sequential growth in both data center and embedded, and modest growth in client and gaming. Additional guidance included non-GAAP operating expenses of about $3.3 billion and a non-GAAP effective tax rate of 13%.
In closing remarks, Su said AMD sees “a clear path to exceed our long-term financial targets,” including “delivering more than $20 in EPS over the strategic timeframe,” citing accelerating data center demand and capacity expansion efforts.
About Advanced Micro Devices NASDAQ: AMD
Advanced Micro Devices, Inc NASDAQ: AMD is a global semiconductor company that designs and sells microprocessors, graphics processors, chipsets and adaptive computing solutions for a broad set of markets. The company's product portfolio includes consumer and commercial CPUs under the Ryzen and Threadripper brands, data center processors under the EPYC brand, and Radeon graphics processing units for gaming and professional visualization. AMD also offers semi-custom system-on-chip (SoC) products for gaming consoles and other specialized applications, and provides supporting software and platform technologies for OEMs, cloud service providers and end users.
Founded in 1969, AMD has evolved from a supplier of logic chips into a diversified, fabless semiconductor designer.
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