AMD Forecasts $13 Billion in Third-Quarter Revenue; Shares Fall 9%
Key Facts
AMD forecast revenue of about $13 billion, plus or minus $300 million, in the third quarter of 2026, according to its second-quarter results release. The guidance exceeded LSEG analysts’ estimate of $12.52 billion, while the company projected an adjusted gross margin of about 56%. Reuters said the margin estimate was largely in line with expectations. But the initial market reaction was negative: the company’s shares fell about 9% in extended trading on August 4, 2026, according to Reuters. Attention is therefore focused on whether data-center growth can continue to support revenue, as the company expects sales to accelerate in the second half of the year.
Data-center revenue was $6.72 billion in the second quarter, exceeding analysts’ estimate of $6.48 billion, according to Reuters. Revenue rose 16.3% from the first quarter, when it was $5.78 billion. AMD attributed the segment’s year-over-year revenue increase to strong demand for EPYC processors and Instinct GPUs. Chief Financial Officer Jean Hu said the company expects data-center sales to accelerate in the second half of 2026, supporting overall revenue growth and continued earnings expansion. That outlook puts the segment’s performance at the center of the company’s trajectory for the rest of the year, following the increase recorded between the first and second quarters.
Revenue from the client and gaming segments combined was $3.8 billion in the second quarter, up 6% year over year, according to AMD’s release. Revenue from the client business alone rose 23% to $3.1 billion, while gaming revenue fell 31% to $779 million. The figures show mixed performance across the two segments: client growth was offset by a decline in gaming. They also do not support describing the PC market as experiencing a persistent slowdown during the period cited: client revenue rose year over year. Neither the release nor Reuters’ coverage confirmed that AMD had begun shifting production capacity from PCs to server and AI processors.
At the product level, Reuters said AMD had expanded its AI product offering from selling chips individually to offering systems that include processors, networking equipment and other components. The shift allows the company to present customers with an integrated option, in Reuters’ description, while Chief Executive Lisa Su said AMD entered the second half with strong momentum. Su added: "EPYC demand is accelerating, Instinct deployments are expanding, and Helios is beginning to scale." Her remarks link accelerating demand for server processors, deployment of AI accelerators and the start of Helios growth, without the figures in the release specifying each product’s contribution to projected revenue.
AMD’s outlook extends beyond the third quarter. The company said it expects data-center sales to more than double in 2027 and revenue growth to exceed its previous target of more than 35%. It also forecast annual earnings above its $20-per-share target announced at its 2025 analyst day, according to Reuters. In the near term, Hu said accelerating data-center sales in the second half of 2026 would support revenue growth and earnings expansion. These targets place the segment’s sales trajectory, alongside client growth and gaming’s decline, in the context of investors’ assessment of the quarterly guidance and the market’s reaction to it.