Advanced Micro Devices (AMD) reported better-than-expected fiscal second-quarter results and issued third-quarter revenue guidance above Wall Street estimates at the midpoint, though shares of the chipmaker fell in premarket trading on Wednesday.
The company's adjusted earnings came in at $1.66 a share for the quarter ended June 27, up from $0.48 the year before, it said late Tuesday. The consensus on FactSet was for non-GAAP EPS of $1.62. Revenue jumped 50% to $11.54 billion, exceeding the Street's view for $11.31 billion.
For the ongoing three-month period, AMD anticipates revenue of about $13 billion, plus or minus $300 million. The Street is looking for sales of $12.82 billion. The midpoint of the guidance represents an annual increase of 41%. Adjusted gross margin is pegged at roughly 56%, in line with analysts' estimates. The metric rose by 13 percentage points to 56% in the second quarter.
While results and outlook were both ahead of consensus, they appear to have fallen shy of elevated expectations post Intel's (INTC) strong second-quarter print, RBC Capital Markets said in a note emailed Wednesday. The brokerage believes component supply, data center readiness and competition remain potential challenges for AMD.
Last month, rival Intel reported second-quarter results ahead of market estimates, driven by a 59% surge in its data center and artificial intelligence unit. Tech bellwether Nvidia (NVDA) is expected to report its latest financial results later this month, while chipmaker Broadcom (AVGO) is scheduled to release its earnings in September.
"While we remain positive on CPU growth, intensifying competition from in-house ARM-based solutions presents (long-term) risk," RBC analyst Srini Pajjuri said in the note.
The stock fell 8.5% in the most recent premarket activity.
AMD's data center revenue soared to $6.72 billion in the second quarter from $3.24 billion last year, buoyed by robust demand for the firm's EPYC processors and Instinct graphics processing units. "We expect data center sales to accelerate in the second half of 2026, driving stronger overall revenue growth and continued earnings expansion," Chief Financial Officer Jean Hu said in a statement.
Client segment revenue rose 23% to $3.06 billion amid strong demand for the company's Ryzen processors. The embedded segment logged revenue growth of 19% to $977 million amid improving demand across multiple end markets.
Gaming sales dropped 31% to $779 million due to lower semi-custom revenue, while elevated component costs across the industry contributed to higher graphics card prices and weighed on overall demand, Chief Executive Lisa Su said during an earnings call, according to a FactSet transcript.
AMD is planning for a "softer" PC market in the second half of the year with high memory and component costs to impact demand, Su said on the call. "Against this backdrop, we expect our client business to perform better than the market, driven by the strength of our Ryzen portfolio and growing commercial adoption," Su said.
