AMD has experienced a significant decline in its share price, dropping over 7% in after-hours trading following the company’s announcement of record revenue for the second quarter. Despite the strong financial results, the sharp increase in capital expenditures has raised concerns among investors.
In the second quarter, AMD reported capital expenditures of $808 million, a notable rise from $389 million in the previous quarter and $282 million in the same quarter last year. Over the first half of 2026, these expenditures totaled $1.2 billion, a sharp increase from $494 million during the same timeframe last year.
The company's free cash flow has also seen a decline, falling to $1.56 billion from $2.57 billion in the preceding quarter. However, it still surpassed last year's figure of $1.18 billion. Operating cash flow from continuing operations was $2.37 billion, which is a decrease from $2.96 billion in the last quarter but an increase from $1.46 billion a year earlier.
#What Were AMD’s Revenue Highlights?
AMD's revenue reached a record $11.54 billion, reflecting a 50% increase from $7.69 billion in the same quarter last year and a 13% rise compared to the first quarter. The company’s adjusted earnings per share were reported at $1.66, compared to $0.48 a year earlier, while adjusted net income soared by 253% to $2.76 billion. Additionally, adjusted operating income rose to $3.09 billion from $897 million a year earlier.
On a GAAP basis, AMD's net income stood at $2.3 billion, translating to $1.38 per diluted share. This compares favorably with $872 million, or $0.54 per share, reported in the same quarter last year.
#What Contributed to AMD’s Growth?
The data center segment was a significant driver for AMD, with revenue more than doubling to $6.72 billion from $3.24 billion in the previous year. This growth is largely attributed to the strong demand for AMD's EPYC processors and Instinct accelerators, which together constituted 58% of AMD’s total revenue for the quarter. This segment also generated an operating income of $2.1 billion.
In other revenue segments, client and gaming revenue experienced a modest increase, totaling $3.84 billion, which represents a 6% rise. Client revenue grew by 23%, amounting to $3.06 billion; however, gaming revenue saw a decline of 31% to $779 million, primarily due to lower semi-custom revenue. Embedded revenue also increased, totaling $977 million, providing an operating income of $386 million.
#What Does AMD Forecast for the Future?
AMD ended the quarter with a strong cash position, possessing $13.11 billion in cash, cash equivalents, and short-term investments, up from $12.35 billion in the previous quarter. The company's total debt has remained stable at $3.23 billion.
Looking ahead, AMD anticipates revenue for the third quarter to be around $13 billion, with a variance of plus or minus $300 million. This projection signals a potential growth of about 41% year over year, along with a 13% sequential increase. The company expects its adjusted gross margin to stabilize at approximately 56%.
The CEO of AMD expressed optimism regarding the acceleration of data center sales in the latter half of the year as demand for EPYC processors continues to rise, paired with expanding deployments of their Instinct accelerators and the Helios rack scale platform. Furthermore, it was highlighted that several high-profile companies including Anthropic, Meta, Microsoft, OpenAI, and Oracle are adopting Helios systems. AMD also reported a new agreement involving the deployment of MI450 Series accelerators for use in Helios racks, amounting to two gigawatts.