AMD Q2 2026 earnings: Data Center revenue more than doubles

AMD (NASDAQ: AMD) reported Q2 2026 revenue of $11.536 billion, up 50% year over year, while GAAP diluted EPS increased to $1.38 from $0.54 for the quarter ended June 27, 2026. Record Data Center sales drove the expansion, with higher revenue also lifting operating margins despite continued growth in operating expenses.

Core financial results

Revenue increased 13% sequentially as well as 50% year over year. Profit growth outpaced sales growth: AMD moved from a GAAP operating loss in Q2 2025 to $1.990 billion of operating income, while non-GAAP operating income more than tripled.

The following figures are in USD millions except per-share amounts and margins.

GAAP and non-GAAP results differ primarily because AMD excludes items such as stock-based compensation, acquisition-related intangible amortization and other acquisition-related costs from its adjusted figures.

Business and segment performance

Data Center was the primary growth engine and represented 58% of total company revenue. Client and Embedded also expanded, but lower semi-custom revenue caused Gaming sales to decline.

Data Center growth was supported by demand for AMD EPYC processors and Instinct GPUs. Its segment operating income improved to $2.103 billion from a $155 million loss in the prior-year quarter.

Client and Gaming generated combined revenue of $3.841 billion, up 6%, but combined segment operating income declined to $582 million from $767 million. This shows that Client growth did not fully offset the earnings impact associated with weaker Gaming revenue. Embedded operating income rose to $386 million from $275 million as demand strengthened across multiple end markets.

Data Center scale drove margins, but the prior-year charge magnified the comparison

AMD’s year-over-year margin expansion partly reflects an unusually weak Q2 2025 comparison. That quarter included $800 million of inventory and related charges resulting from U.S. export controls on Instinct MI308 data center GPUs. The charge affected both the reported and adjusted comparisons disclosed by AMD.

Sequential results provide a cleaner indication of current operating progress. From Q1 2026 to Q2 2026, GAAP gross margin increased from 53% to 54%, non-GAAP gross margin rose from 55% to 56%, and non-GAAP operating margin improved from 25% to 27%. Revenue increased 13% over the same period.

Operating expenses continued to rise—32% on a GAAP basis and 40% on a non-GAAP basis year over year—but revenue grew faster. Consequently, GAAP operating expenses declined to 37% of revenue from 42%, while the non-GAAP ratio fell to 29% from 32%.

Profitability, cash flow and balance sheet

Below-operating-line items also affected GAAP earnings. AMD recorded $598 million of net other income in Q2 2026, including $483 million of net gains on long-term investments. The prior-year period, meanwhile, included an $834 million income tax benefit, including an $853 million release of reserves for uncertain tax positions. These items make operating income and non-GAAP results useful alongside GAAP net income when comparing the two periods.

Adjusted EBITDA increased to $3.315 billion from $1.086 billion. Cash generation also improved year over year, although higher capital spending limited free cash flow growth. Operating cash flow from continuing operations was $2.366 billion, compared with $1.462 billion, while free cash flow rose to $1.558 billion from $1.180 billion. Free cash flow margin nevertheless decreased to 14% from 15% as capital expenditures increased to $808 million from $282 million.

At quarter-end, AMD held $13.111 billion of cash, cash equivalents and short-term investments against $3.226 billion of total debt. Inventory increased to $8.468 billion from $7.920 billion at December 27, 2025, while accounts receivable rose to $7.281 billion from $6.315 billion.

Q3 2026 guidance

AMD expects another sequential revenue increase in Q3, while its projected non-GAAP gross margin is unchanged from the Q2 level. The company did not provide a prior guidance range for comparison in the supplied results.

The midpoint implies a revenue range of $12.7 billion to $13.3 billion. Management expects Data Center sales to accelerate during the second half of 2026 and support further company-level revenue and earnings expansion.

Management perspective

Chair and CEO Lisa Su attributed the quarter’s performance to accelerating EPYC demand and scaling Instinct deployments. Management also expects the Helios rack-scale platform to begin ramping as AMD expands its AI infrastructure portfolio.

The company highlighted new Instinct MI400 accelerators, sixth-generation EPYC server CPUs and partnerships with customers and technology providers including Anthropic and Microsoft. These announcements support management’s second-half outlook, but the financial contribution from individual products and partnerships was not quantified.

Recent insider transactions

Aggregate records for the latest six-month period show 828,389 shares acquired across 19 transactions and 644,258 shares sold across 17 transactions, resulting in net acquisitions of 184,131 shares. Because the records include option exercises and other transaction types, the net figure should not be treated by itself as evidence of insiders’ outlook for AMD.

The following recent entries had complete insider, date, transaction type and value information.

Risks investors should monitor

• Export restrictions: Q2 2025’s $800 million MI308-related charge demonstrates how U.S. export controls can affect Data Center sales, inventory and margins.
• Dependence on Data Center execution: With Data Center accounting for 58% of revenue, AMD’s outlook increasingly depends on EPYC demand, Instinct deployments and the Helios ramp proceeding as management expects.
• Gaming weakness: Gaming revenue fell 31% because of lower semi-custom sales, offsetting part of the growth in the Client business.
• Cash conversion and working capital: Capital expenditures rose sharply, while inventory and accounts receivable increased from year-end. Continued investment or working-capital requirements could constrain free cash flow even if earnings expand.

Summary

AMD’s Q2 2026 growth was led by Data Center, with EPYC and Instinct demand driving record revenue and better operating leverage. The year-over-year profit comparison benefited from the prior-year export-control charge, but sequential margin improvement indicates that the gains were not solely a base effect. The main issues for coming quarters are whether Data Center sales accelerate as guided, whether Gaming stabilizes and how effectively rising earnings convert into free cash flow.