Advanced Micro Devices, Inc.

Greetings and welcome to the AMD second quarter 2026 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note that this conference is being recorded. I will now turn the conference over to Matt Ramsey, VP Financial Strategy and IR. Thank you, Matt. You may begin.

Thank you and welcome to AMD's second quarter 2026 financial results conference call. By now, you should have had the opportunity to review a copy of our earnings press release and the accompanying slides. If you have not had the chance to review these materials, they can be found on the investor relations page of AMD.com. Today, we will refer primarily to non-GAAP financial measures during the call. The full non-GAAP to GAAP reconciliations are available in today's press release and slides posted on our website. As a reminder, our second quarter 2025 results included approximately 800 million of inventory and related charges associated with U.S. export control restrictions on MI308 shipments to China. Unless otherwise noted, comments making year-over-year comparisons exclude the impact of those charges to provide a more comparable and meaningful view of our underlying business performance. Participants on today's conference call are Dr. Lisa Su, our Chair and CEO, and Jean Hu, our Executive Vice President, CFO, and Treasurer. This is a live call, and we will be replayed via webcast on our website. Before we begin, I would like to note that AMD will participate in the following events for the financial community. KeyBank's Technology Leadership Forum on Tuesday, August 11th. City's 2026 Global TMT Conference on Tuesday, September 8th, and the Goldman Sachs Communicopia and Technology Conference on Friday, September 11th. Today's discussions contain forward-looking statements based on the current beliefs, assumptions, expectations, including forward-looking statements regarding financial projections, business and industry trends that speak only as of today and as such involve risk Thank you, Matt, and good afternoon to all those listening today. We delivered another outstanding quarter with record revenue and profitability as adoption of our leadership products continued to expand.

Revenue increased 50% year-over-year to $11.5 billion, driven by significantly higher sales of Epic, Instinct, Ryzen, and embedded processors. Data center revenue more than doubled year-over-year and now represents 58% of total revenue, up from 42% a year ago, reflecting the rapidly expanding scale of our server and data center AI businesses. Our record results mark another clear step up in AMD's financial performance and demonstrate the strength of our product portfolio and execution. We are still in the early stages of a multi-year AI adoption cycle as deployments grow across a broad set of markets and workloads, driving demand for more compute and creating a clear path to significant revenue growth and earning power in the years ahead. Turning to our segments, Data Center revenue grew 107% year-over-year to a record $6.7 billion, driven by strong demand for EPIC processors and Instinct accelerators. In server, we delivered our fifth consecutive quarter of record server CPU revenue, with cloud and enterprise sales each growing more than 70% year-over-year, exceeding the outlook we provided last quarter. We gained x86 server revenue share year-over-year, as customers expanded deployments of both 5th Gen Epic Turin and 4th Gen Epic Genoa families. In cloud, hyperscalers continued expanding Epic across their internal infrastructure and public cloud offerings, including AWS, Microsoft, Google, Oracle, and others. 5th Gen Epic Turin now powers nearly one third of the more than 1,600 Epic public cloud instance types available globally. as providers broaden their offerings with new database storage and AI workloads. That expanding footprint is translating into growing adoption of Epic in the cloud with healthcare, financial services, media, and technology companies adding tens of millions of instances in the last quarter. In enterprise, we delivered record sales in our fourth consecutive quarter of record sell-through as on-prem adoption accelerated driven by the leadership performance and TCO advantages of our EPIC portfolio. Growth was broad-based as we won large deployments with leading financial services, manufacturing, telecom, retail, and technology companies. More than 230 5th Gen EPIC platforms are now in market from HPE, Dell, Lenovo, Supermicro, and others, our broadest enterprise portfolio to date. Looking ahead, Agentech AI is creating a new growth vector for server CPUs, spanning high-frequency AI host nodes, high-density Agentech servers, and general-purpose cloud and enterprise workloads. Our 6th Gen EPYC Venice family is purpose-built for this expanding range of workloads and delivers one of the largest generational performance gains in EPYC history. Built on our all-new Zen 6 core and 2 nanometer technology, Venice extends EPIC leadership in performance and efficiency, delivering more than twice the performance per watt of leading x86 CPUs and up to 3.3 times the performance per watt of leading ARM-based CPUs. The Venice family includes more than 30 processors that combine leadership per core and per socket performance with a broad range of memory and I.O. configurations. giving customers greater flexibility to optimize performance, efficiency, and TCO across the most widely used cloud, enterprise, and HPC workloads. Venice is in production now, with every major OEM on track to launch platforms and the leading cloud providers planning deployments beginning later this year. Customer demand for Venice is stronger than for any prior EPIC generation, and we expect to continue growing market share across cloud and enterprise in the coming quarters. Turning to our data center AI business, revenue more than doubled year over year, driven by strong demand for instinct accelerators. MI355X adoption continued to broaden as leading AI companies scaled deployments across a growing range of inferencing and training workloads, and cloud providers expanded MI350 series availability. At our Advancing AI event, we launched Helios, our rack-scale AI platform combining Epic Venice CPUs, MI450 series GPUs, Pensando networking and Rackham software. Across a broad range of inferencing workloads, Helios delivers up to 15% more throughput at the same rack power, and up to 30% more tokens per dollar than the competition. Customer pull for Helios is very strong and tracking ahead of our initial forecasts. In addition to our multi-generation gigawatt scale deployments with OpenAI and Meta, we announced a new strategic partnership with Anthropic. Anthropic will deploy up to two gigawatts of MI450 series GPUs in Helios. with deployment of the first gigawatt beginning in the first half of 2027. The partnership includes a multi-year joint engineering collaboration using Claude to optimize workloads for Instinct GPUs and accelerate Rackham software development. We also expanded our longstanding partnership with Microsoft. Microsoft will deploy Helios at scale on Azure for frontier model inferencing across Microsoft, its AI customers, and Azure AI Services. Together, these commitments broaden the group of leading AI companies and cloud providers building their next generation infrastructure on AMD. Helios is now in production with initial shipments on track to begin later this quarter and ramp through the fourth quarter and into 2027 to meet very strong customer demand. Looking beyond Helios, we plan to launch a new rack scale AI platform every year, with each generation delivering significant performance, efficiency, and TCO gains. In 2027, our next generation platform combines MI500 series GPUs, Verano CPUs, and Pensando networking with expanded scale-up domains and both copper and optical-based interconnects. Customer engagement on MI500 is very strong, with multiple customers working closely with us as they plan their next generation AI infrastructure. We expect MI500 to deliver the largest generational leap in Instinct history, putting us on track to increase inferencing performance more than 2,000 times in just four years. Turning to our AI software stack, Rackham has reached an important inflection point, with the performance, capabilities, and developer experience customers need to deploy AI in production at scale. The breadth of the ecosystem also continues to expand. More than 3 million models now run out of the box on AMD. The leading open models launch with day zero support for Instinct, and open source contributions to Rackham have increased more than tenfold over the past year. We introduced Rackham.ai, our new AI-assisted development platform for AMD GPUs last month. Rackham.ai lets developers use today's leading coding agents, including Claude, Codex, and Cursor, to create, port, and optimize code for instinct, making it significantly faster and easier to bring new models and workloads to AMD. Rackham.ai delivers more than twice the training performance and more than three times the inferencing performance of Rackham 7 across a broad range of models. We are also working closely with the leading AI labs including OpenAI, Anthropic, Meta, and others to co-optimize Rackham for their models with the improvements benefiting the entire AMD ecosystem. Taking a step back, the overall data center market opportunity is expanding far more rapidly than we projected just six months ago. As AI moves into production across a broader range of applications and workloads, Demand for both accelerators and CPUs is growing well above our prior expectations. We now expect the data center AI accelerator market to grow more than 45% annually to approximately $1.4 trillion by 2030. And we expect the server CPU market to grow more than 50% annually to approximately $220 billion by 2030. For AMD, this larger opportunity, combined with the strength of our portfolio and growing customer visibility, is creating a steeper growth trajectory for our data center business. In data center AI, the growing number and scale of Helios and MI450 series instinct deployments position the business for significant growth in the second half of the year, with growth accelerating in 2027. In server CPUs with very strong customer demand and improved supply, we now expect server revenue to grow more than 80% year-over-year in the second half of 2026 and more than 70% for the full year 2027 off a much higher base. Taken together, we now expect data center segment revenue to more than double year-over-year in 2027. Turning to client and gaming, Segment revenue grew 6% year-over-year to $3.8 billion. In client, revenue increased 23% year-over-year to $3.1 billion, driven by record mobile processor revenue and continued share gains. Commercial adoption continued to expand in the quarter, with rise in pro sales growing more than 50% year-over-year as we closed new wins with large healthcare, technology, automotive, and financial services companies. To build on this momentum, Dell, HP, Lenovo, Asus, and others launched a broad portfolio of new commercial PCs powered by our latest generation Ryzen AI Pro 400 series processors. Demand was also strong for our Ryzen AI Halo developer systems, which went on sale in the quarter. In July, we introduced our next generation Ryzen AI Halo platform, powered by our new Gorgon Halo processor, featuring an industry-leading 192 gigabytes of unified memory and can run models with up to 300 billion parameters. And to make it even easier for developers to build and test large AI models locally, we are partnering with Hugging Face to include one year of Hugging Face Pro with every Ryzen AI Halo system beginning later this year. Looking to the second half of the year, we're planning for a softer PC market as higher memory and component costs weigh on demand. 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. In gaming, revenue declined 31% year-over-year to $779 million, primarily due to lower semi-custom sales at this stage of the console cycle. Gaming graphics revenue also declined year-over-year as higher industry-wide component costs contributed to higher graphics card prices and weighed on overall demand. Turning to our embedded segment, revenue increased 19% year-over-year to $977 million, our strongest growth in more than three years. Demand was broad-based, with strength across networking, aerospace and defense, test measurement and emulation, and communications customers. Our embedded x86 business grew significantly in the quarter as hyperscalers and networking customers increasingly adopted our CPUs to power critical networking and control plane functions in the data center. We also continued to expand our portfolio, introducing Ryzen AI embedded X100 processors for demanding real-time edge AI workloads and the CREA AI robotics platform for physical AI. Looking more broadly, the strategy we have been executing over the last few years is now delivering strong results. Embedded x86 is becoming a significant growth driver for the segment. Our overall embedded portfolio is outgrowing the market and gaining share, and our embedded semi-custom engagements are expanding. Design win momentum also remains very strong. We are tracking towards another record year with more than 18 billion of new design wins led by major wins with networking, data center, communications, test, and aerospace and defense customers. In summary, we delivered record revenue and profitability in the second quarter, reflecting our strong execution and the growing adoption of our leadership products. We entered the second half with strong momentum across our businesses. With Venice and MI455X now in production, initial Helios shipments set to begin this quarter Ryzen Pro CPUs driving continued commercial share gains and our embedded segment returning to strong year-over-year growth. More than a decade of focused investment has given us the strongest and broadest product portfolio in the industry, deep strategic relationships with the companies driving the future of computing, and a proven ability to deliver multi-generation roadmaps and ramp complex products at scale. At the same time, AI is driving demand for dramatically more compute across all of our markets. We now see the overall market for high performance in AI computing growing approximately 40% annually over the next several years, approaching 2 trillion by 2030. And we expect to grow well above the market. As a result, we are tracking materially ahead of the long-term financial model we shared at our Financial Analyst Day last November. We now expect revenue to grow substantially above our prior target of greater than 35%, and we expect to significantly exceed our $20 annual EPS target within our strategic timeframe. We are still in the early innings of a multi-year AI adoption cycle, and the opportunity ahead is enormous. We are exceptionally well positioned to capitalize on this opportunity and deliver significant growth in the coming years. Now I will turn the call over to Jean to provide additional color on our second quarter results. Jean?