AMD (Advanced Micro Devices) Q3 2026 Earnings Call Transcript

Customers can configure Helion for their workloads, from all CPU racks for hyperscalers to enterprise systems, including Venice and Instinct GPUs that can run agents and models together.

In the all CPU configuration, a single Helion rack has up to 144 Venice processors, with nearly 74,000 threads, delivering the highest agent density in the industry. Every major server OEM and ODM plans to offer Helion with the first system shipping this quarter.

Looking more broadly, demand for server compute is accelerating across cloud, enterprise, agentic and super intelligence infrastructure. EPYC is the industry’s broadest portfolio spanning all of these markets, with per socket leadership for cloud and agents, per core leadership for enterprise and head nodes, and memory and IO option tuned to each workload.

Venice builds on that leadership with significantly better performance per watt, performance per core, and performance per dollar than any other x86 or ARM server CPU, positioning us to gain share and significantly grow our server business as the TAM grows approximately $220 billion by 2030.

Data Center AI: Instinct MI450 Series and Helios

Turning to our Data Center AI business. Frontier Labs, hyperscalers and cloud providers expanded Instinct deployments for inferencing and training, record revenue. We started shipping MI455X in volume in the quarter and lead customers including Anthropic, Meta, Microsoft, OpenAI and Oracle brought their first Helios racks online quickly.

Customers are now running their latest models and workloads on Helios and we are seeing very strong performance with the initial deployments. We expect Helios deployments to increase substantially in the fourth quarter as production continues to ramp and HPE, Dell, Lenovo, Supermicro and other OEM and ODM partners begin shipping systems.

We are very pleased with the overall performance we are seeing at the rack level. MI455X leads in compute FLOPS, memory capacity and scale out bandwidth. And as Helios comes to market, it delivers an even larger lead in memory bandwidth and higher scale up bandwidth than the competition. We are working closely with our manufacturing OEM partners to scale production as customers expand their deployments.

In supercomputing, EuroHPC selected Instinct MI430X GPUs and sixth Gen EPYC processors for LUMI-AI, Europe’s next flagship supercomputer planned to come online in the second half of 2027. MI430X delivers nearly nine times the double precision performance of the competition, which is critical for scientific simulations.

As a result, MI430X has now been selected to power next generation systems around the world. And we are well positioned to win additional designs as governments and research centers plan their next major investments.

ROCm 10 Software and Ecosystem

In software, we launched ROCm 10 with major enhancements for production deployments at scale, including faster startup across large GPU clusters and greater resilience for long running workloads. ROCm 10 also adds agentic performance tuning with ROCm.AI, which profiles workloads, identifies bottlenecks and applies and validates improvements, turning weeks of engineering optimization into hours.

Customers are also using their own agents to optimize models on our open software stack. For example, Anthropic highlighted that one engineer used Claude to bring up their latest model on Instinct MI355X racks over a single weekend with strong performance.

Our work with Frontier Labs is already enabling their models to handle complex software development and performance tuning for Instinct. And as those capabilities continue to improve, the benefits extend to everyone in the AMD ecosystem.

Taalas and World Labs Acquisitions

We announced two acquisitions in the quarter to strengthen our Super Intelligence portfolio. Taalas brings a highly experienced engineering team and specialized silicon built for low latency efficient inference. We plan to integrate their technology across our solutions portfolio to address the growing demand for low latency superintelligence applications.

World Labs led by co founder and CEO, Dr. Fei-Fei Li brings a world class research team with expertise in spatial intelligence models that understand the physical world, giving us deeper insight into how frontier models and workloads are evolving. Fei-Fei will join AMD as Chief Scientist, leading our model research and helping shape our future hardware, software and systems roadmaps. We expect both acquisitions to close by the end of the year.

Data Center Outlook for Q4 and 2027

Looking ahead, our focus is on execution at scale. The ramps of Venice, the MI450 Series and Helios are still early and all three are on track to grow significantly.

We now expect data center segment revenue growth to accelerate in the fourth quarter and full year segment revenue to more than double from 2025. Our visibility into 2027 also continues to strengthen.

Last quarter, we said we expected annual server revenue to grow more than 70% and data center segment revenue to more than double for the year. Since then, customers have expanded their EPYC and Instinct deployment plans, and we have secured more supply to support that growth. We now expect server revenue to double year over year in 2027 and data center AI revenue to grow even faster than we projected 90 days ago.

As a result, we expect data center to be more than 80% of our total revenue in 2027 and to drive the majority of our revenue and earnings growth.

Looking further out, customer engagements for MI500 continued to progress very well. Interest is very high as it is another significant forward in performance. We are working very closely with multiple Frontier Labs to optimize MI500 for their workloads, as they plan multi gigawatt deployments.

Client and Gaming Segment

Turning to Client and Gaming. Segment revenue decreased 8% year over year to $3.7 billion. In Client, revenue increased 7% year over year to $2.9 billion driven by strong sales of our Ryzen mobile processors.

Commercial is becoming a larger part of our client business, as large enterprises adopt Ryzen PRO PCs across their employee base. Eight of the ten largest banks in the world and seven of the ten largest healthcare and automotive companies now use Ryzen PRO PCs.

OEMs continue expanding their AMD based commercial lineups from everyday business PCs to high end workstations. HP, Lenovo and others launched the first commercial notebooks and small form factor desktops, featuring our newest Ryzen AI Max PRO 400 Series processors. These systems deliver workstation class performance and run superintelligence models with up to 300 million parameters locally.

Looking at the market, PC sell through slowed late in the quarter as higher memory and component costs weighed on demand. We are managing the business accordingly, aligning sell in with sell through to keep customer and channel inventory healthy. In 2027, we are planning for PC market unit shipments to decline by double digit percentage. In this environment, we expect to outperform the market as we deliver our Ryzen roadmap and grow our commercial footprint.

In Gaming, revenue declined 40% year over year to $773 million primarily due to lower semi-custom sales as expected at this stage of the console cycle. Gaming graphics revenue declined year over year, while Radeon GPU channel sell through increased sequentially.

Beyond gaming, Radeon AI PRO revenue grew significantly from the prior quarter as more users choose AMD to run and fine tune models locally. We expect strong growth for Radeon AI PRO to continue, driven by our leadership performance per dollar and an open software stack optimized for the latest open source models.

Embedded Segment

Turning to our Embedded segment, revenue increased 29% year over year to $1.1 billion the fourth consecutive quarter of accelerating growth. Demand was very strong across all of our end markets, led by strong growth with aerospace and defense, automotive, communications and industrial customers. Data center build outs are also driving higher demand for our embedded CPUs and adaptive SoCs in control plane and optical networking applications.

We remain on track to close more than $18 billion of design wins in 2026, our third consecutive record year. Adaptive design wins have increased every year since we acquired Xilinx with embedded x86 and semi-custom wins growing even faster. As these wins ramp over the next few years, expect our embedded business to deliver strong double digit annual revenue growth and continue outgrowing the market.

2027 Revenue Outlook and Long-Term Investment

In summary, we delivered an excellent third quarter and expect an even stronger fourth quarter as data center and embedded segment growth more than offset lower client CPU sales. We entered 2027 with the strongest product portfolio in our history and significant customer momentum.

We have worked across our supply chain to secure the wafers, substrates, advanced packaging, memory and other key components needed to support much of our growth next year. Based on our current visibility, we now expect revenue to grow more than 80% in 2027, which is more than twice the long term financial model we outlined at our Financial Analyst Day last November. Data center will be the largest contributor driven by expanding Helios deployments and continued EPYC share gains.

We also expect embedded growth to accelerate next year, driven by adoption of our adaptive and x86 solutions.

Beyond 2027, we are increasing R&D investment across our silicon, software and systems roadmaps and working closely with our largest customers to support their ambitious infrastructure plans for the next three to five years. We are also deepening our collaboration with our supply chain partners and investing alongside them to secure the long term capacity our growth will require.

Taken together, these give us strong confidence in our ability to sustain exceptional revenue for years to come, with earnings growing even faster. Now I will turn the call over to Jean to provide additional color on our third quarter results. Jean?

CFO Jean Hu on Q3 2026 Financial Results

Jean Hu, Executive Vice President, CFO and Treasurer – AMD: Thank you, Lisa, and good afternoon, everyone. I’ll start with a review of our financial results and then provide our outlook for the fourth quarter of fiscal 2026.

We delivered an outstanding third quarter. Revenue increased 45% year over year to a record $13.4 billion exceeding the high end of our guidance, driven by our data center segment, which nearly doubled year over year.

Revenue increased 16% sequentially, driven by strong growth in the data center and embedded segments, partially offset by decline in the client and the gaming segment. Our data center segment accounted for approximately 64% of total revenue, up from 58% last quarter, underscoring the continued shift in our business mix and its increasing contribution to AMD’s growth.

Gross margin was 56%, up 190 basis points year over year, reflecting a richer product mix. Operating expenses was $3.6 billion an increase of 29% year over year as we continue to invest in R&D to expand our data center silicon systems and the software capabilities.

Operating income grew 75% year over year to a record $3.9 billion significantly outpacing our revenue growth. Operating margin was 29%, expanding more than five percentage points year over year, underscoring the operating leverage in the business as we scale.

In the third quarter, we began recognizing the continued impact of warrants issued under our previously announced customer agreement, as we shipped MI450 Series GPUs. Our GAAP diluted earnings per share were $1.46 which included $1.1 billion non cash charge in other income and expense, primarily reflecting the increase in our share price and the changes in the estimated probability of meeting the warrant conditions.

Going forward, this quarterly non cash fair value adjustment is expected to increase as we and our customers progress under this agreement. The amounts will vary each quarter based on AMD’s stock price and other valuation assumptions. These non cash adjustments will not affect our non GAAP results or free cash flow. Our non GAAP diluted earnings per share were $2.09.

Segment Results

Now turning to our reportable segment, starting with the data center. Data center segment revenue was a record of $8.5 billion up 97% year over year, driven by record server revenue and strong demand for our fifth generation EPYC processors and by record data center AI revenue, highlighted by the launch of our AMD Instinct MI450 Series GPUs.

On a sequential basis, data center revenue increased to 27%, primarily driven by initial MI450 Series sales and the strong server revenue growth. The data center segment operating income was $2.9 billion up 168% year over year, and operating margin increased to 34% compared to 25% a year ago, demonstrating strong operating leverage of data center business.

Client on the gaming segment revenue was $3.7 billion down 8% year over year due to lower semi-custom and graphic sales, partially offset by higher demand for the latest generation Ryzen mobile processors.

In the client business, revenue was $2.9 billion up 7% year over year, driven by higher sales of Ryzen mobile processors. Sequentially, client revenue was down 4% as higher memory cost weighted on PC unit demand partially offset by richer mix of high end processors.

Gaming revenue was $773 million down 40% year over year due to lower semi-custom revenue and lower graphics demand. Sequentially, gaming revenue was essentially flat. Client and gaming segment operating income was $573 million or 15% of revenue, compared to $867 million or 21% a year ago.

Embedded segment revenue was $1.1 billion up 29% year over year and 14% sequentially as demand strengthened across several end markets led by growth in aerospace and defense, automotive, communication and industrial end markets. Embedded segment operating income was $453 million or 41% of revenue compared to $283 million or 33% a year ago.

Balance Sheet and Cash Flow

Turning to balance sheet and cash flow. During the quarter, inventory increased approximately $3 billion sequentially to $11.5 billion to fulfill our strong data center demand.

We generated $1.2 billion in cash from operating activities of continuing operations. Free cash flow was $554 million reflecting increased working capital investment and ongoing capital expenditures to secure equipment and capacity for the rapid growth of our data center business, including back end capacity dedicated to support our data center demand. We expect to continue to invest in inventory and capacity to support our strong growth in 2027.

At the end of the quarter, cash, cash equivalents and short term investments were $15.8 billion. Our total debt was $7.1 billion including $4.75 billion senior notes offering we completed in August.

Q4 2026 Outlook

Now turning to our fourth quarter 2026 outlook. We expect revenue to be approximately $17 billion plus or minus 3%. The middle point of our guidance represents approximately 66% year over year revenue growth, primarily driven by the acceleration of our data center segment.

Sequentially, we expect revenue to grow by approximately 27%, driven by a sharp increase in our data center segment of approximately 50% growth, a decline in our client and gaming segment of greater than 20%, and the double digit growth in our embedded segment.

In addition, we expect fourth quarter non GAAP gross margin to be approximately 55%, and we expect non GAAP operating expenses to be approximately $3.75 billion. We expect non GAAP net interest and other expense to be a gain of approximately $4 million. We expect our non GAAP effective tax rate to be 13%.

And diluted share count is expected to be approximately 1.67 billion shares, including the estimated impact of closing the Taalas and the World Labs acquisition in the fourth quarter. We are not expecting our fourth quarter share count to be impacted by customer warrants.

In closing, the third quarter was an outstanding quarter for AMD, with record revenue, significant operating margin expansion and earnings growth, reflecting disciplined execution across the business. As our data center business continues to scale, we are very well positioned to drive increased profitability and the long term shareholder value.

With that, I’ll turn it back to Matt for the Q&A session. Thank you very much.

Question-and-Answer Session

OPERATOR: Thank you. We will now be conducting a question and answer session. We ask that you please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue.

You may press star two if you’d like to remove your question from the queue. And the first question comes from the line of Tom O’Malley with Barclays. Please proceed with your question.

2027 Data Center Growth and Supply

Tom O’Malley, Analyst – Barclays: Hey, good evening and thanks for taking my question. Congrats on the great results.

I guess, Lisa, let’s start off with the fact that you’re giving some more color into 2027. It looks like revenue is growing 80%, but the data center component of that is growing much faster where data center is going be greater than 80% of your business next year.

So maybe can you talk about first and foremost, is this backed up by supply, that be wafers, packaging, substrate memory? And then if you look at the demand profile behind that, would demand outstrip that supply if you were able to get some more? Thank you.

Lisa Su, Chair and CEO – AMD: Yes, sure, Tom. Thanks for the question. So look, we have a lot of momentum going into the fourth quarter and into 2027. We do see a situation where there is very strong demand. So we see demand across the data center business, across our CPU business, as well as our data center AI business.

And when you look at the rate and pace of that growth, we’ve been planning for it for the last several years. So we’ve absolutely spent a significant amount of time with our customers, planning what their needs are in terms of their deployments and their deployment schedules, and also with our supply chain partners to ensure that we have the wafers, the substrates, the advanced packaging, the memory, all of the other components that go along with it.

It is true that demand is higher than supply. So we continue to work with our supply chain partners to increase supply. And I do believe that there is a good opportunity for us to do that, just given the strong relationships we have throughout the ecosystem.

But sitting where we are today, to be able to say that the overall company will grow greater than 80%, especially the server business will approximately double from a fairly high point in 2026. And then the data center AI business, we continue to have strong visibility and we see strong demand from our customers and we continue to see also good follow through on all of the other aspects of the infrastructure that are needed. So overall, we’re very positive about the data center growth into 2027.

PC Market Outlook

Tom O’Malley, Analyst – Barclays: Super helpful. And then just as a follow-up on the clients, you’re saying down greater than 20% in the fourth quarter. That’s kind of in line with what we’ve heard from others so far in the market.

But if you look at ’27, I think something that’s difficult is that normally you see seasonality down in Q1 and then you wouldn’t get a recovery kind of till Q2, Q3. So maybe talk about what the longevity of this correction kind of looks like and why you’ve been able to kind of outperform a bit up until this point and how you see that kind of coming out of this trough into next year? Thanks, Lisa.

Lisa Su, Chair and CEO – AMD: Yes, sure, Tom. So talking a little bit about the PC market. The PC market continues to be an important market to us. I think we were signaling all along in the last couple of calls that we were expecting a sub seasonal second half of the year and how it’s played out.

Our view is this is one of those times when component prices go up, it affects overall system pricing. One would expect the consumer markets to be more sensitive to that. And so we have seen a bit of slowdown in the sell through. We’re just managing the business very prudently. And we want to ensure that inventory stays healthy throughout the channel and throughout our customers.

And so our planning assumption for 2027 is that the market will be double digit percentage down. We will certainly focus on the segments where we can add the most value, places like enterprise, where we continue to be underrepresented, premium consumer, desktop channel, these are really good markets for us.

But we are planning with the current environment for a down year for 2027. And we will work through that. The good part about it is our supply chain is quite fungible across our PC business and our data center business. And so that actually does afford us the ability to move supply around as we see these signals in the market.

And overall, as I said earlier, we do have more demand than we have supply. And so we’re continuing to work on all of the aspects to increase our supply as we go through the next few quarters.

Tom O’Malley, Analyst – Barclays: Thank you.

OPERATOR: And the next question comes from the line of Vivek Arya with Bank of America Securities. Please proceed with your question.

Customer Financing, Infrastructure Readiness and Competition

Vivek Arya, Analyst – Bank of America Securities: Thanks for taking my questions. Lisa, there’s a lot of market debate about the financing of data centers and availability of land, power and shell, etcetera, so kind of a two parter, what’s the level of confidence, right, that AMD has that your anchor customers have the financing and the physical infrastructure to support, I think it’s roughly three gigawatts or so of planned AMD deployments into ’27.

And then as we look beyond, many of your competitors are kind of investing in the ecosystem, providing residual value guarantees and such and saying there is a lot more fungibility of their products. So does that create a kind of a competitive dynamic for AMD? Just curious to hear your perspective on ’27 readiness and ’28 competitive landscape.

Lisa Su, Chair and CEO – AMD: Sure Vivek, thanks for the question. So as I said earlier, we’re seeing very strong demand from our lead data center AI customers. I think you can see that there’s a strong demand for more compute and MI455X is positioned extremely well. When we look at Venice, MI455X, Helios, I think we feel extremely good about the competitiveness.

We have been planning for this ramp with our customers jointly. So we have good visibility into 2027, as you said, land, power, shell, all of those, the data center infrastructure. And we are very much working hand in hand with our customers, so we know where the GPUs are going in terms of which data centers and which locations and all that stuff.

Going into 2028 and beyond, I guess what I would say is the following. Look, I think we are seeing very strong growth overall. I think we have a very strong business. We have a very strong balance sheet. And from that standpoint, our goal is first and foremost, we’re investing in our growth to support that.

And that means investing in R&D, investing in supply chain and capacity, investing alongside our partners to ensure that we have the capacity for all of those things that we talked about earlier that are necessary for this type of ramp.

And then we are selectively investing with our lead partners where we see it’s helpful to have, for example, the data center infrastructure identified way in advance and that’s multiple years in advance. And I think that’s the right thing to do to ensure that we are jointly ensuring that there’s the right infrastructure as our new chips become available. But we are being selective and strategic in how we do that with the first principle being investing in our growth.

Custom ASICs vs. AMD GPUs

Vivek Arya, Analyst – Bank of America Securities: Got it. And for my follow-up, Lisa, one more on the competitive landscape. Many of your Frontier Lab customers have been working on their custom ASICs.

And I’m curious, how do they conceptually make the choice between using ASICs versus AMD products, what determines their allocation, is it cost per token, power efficiency, software flexibility, time to deployment, just what are the puts and takes in that decision making and are there workloads where using an AMD GPU works better than the alternatives that they have? Thanks.

Lisa Su, Chair and CEO – AMD: Sure, Vivek. So look, I think we feel extremely good about where we’re positioned in terms of our performance and our total cost of ownership that we’re delivering with Helios. That is fundamentally the most important factor when we think about sort of deployment scale and deployments going forward.

I think there was a significant investment that we’ve made in the rack scale systems and ensuring that Helios really ramped nicely. Quarter was the first quarter that we shipped MI455X Helios racks for revenue. I think this is a very major milestone. We have a big step up in Q4. We’ll continue to ramp throughout 2027.

And the key is for us to continue to show that TCO advantage across workloads. It is true that from a general purpose GPU standpoint that we have more fungibility as you think about various workloads that occur. There has been also very strong co design.

So beyond the MI450 Series, we’re working on MI500 and MI600 as well to ensure that our technology gets even more, let’s call it tuned to what the frontier labs need. So I think those are the key factors in terms of deployment choices.

Vivek Arya, Analyst – Bank of America Securities: Thank you.

OPERATOR: And the next question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your question.

HBM Costs and Revenue per Gigawatt

Joshua Buchalter, Analyst – TD Cowen: Hey guys, thanks for taking my question and congrats on the progress. I was wondering if you could give us insight into how we should be thinking about HBM costs impacting your model as the Instinct business ramps.

I think investors have been asking how your revenue per gigawatt contribution in the last year or so, your outlook has been so consistent in that $15 billion to $20 billion per gigawatt range given what’s going on with HBM pricing. Is that because early builds are fairly program specific and pricing was agreed upon a long time ago?

And again, as we think about that business longer term, do you have the ability to pass on these higher input costs even to your big three customers? Thank you.

Lisa Su, Chair and CEO – AMD: Sure, Josh. So the way to think about it is, as we ramp, we have had, let’s call it long term agreements with some of our suppliers as well as some of our customers.

But given where the memory market is, and not just the memory market, by the way, other component costs are also seeing some inflationary pressures in the sense of as there’s more CapEx that’s put into the overall supply chain environment. We are also working with our customers to include to ensure that those costs are shared as we go forward.

So from my perspective, back to the question that Vivek had, this is all about TCO and ensuring that from a tokens per dollar standpoint that we continue to offer very strong advantages for choosing AMD Instinct and our overall Helios system. And even with some of the inflationary pressures that are out there, we certainly believe that we are offering leading TCO for the AI workloads.

2027 OpEx Growth and Gross Margin

Joshua Buchalter, Analyst – TD Cowen: Thank you, Lisa. Then maybe for Jean, it was good to see OpEx come in light in the third and fourth quarter. It’s been a sticking point for investors for a little bit.

But I guess given how steep the revenue growth is expected to be in 2027, we’re flying a little blind given you’re kind of at more than 2x your target model. How should we think about OpEx growth in 2027?

And I guess while I’m in the neighborhood, do you think you can hold your target gross margin range sort of that 55% floor as we move through the year and Helios continues to ramp? Thank you.

Jean Hu, Executive Vice President, CFO and Treasurer – AMD: Yes. Josh, thank you for the question. On the OpEx, as you said, we have been investing aggressively. What you are seeing is the investment are translating to accelerating revenue growth.

We are seeing in 2026, we’re actually quite pleased with 2026, our operating leverage. We’re expanding revenue much faster than OpEx growth, which driving the operating margin increase. And if you think about the Q4 guide, we’re guiding very significant revenue growth more than OpEx.

That dynamic we believe will carry into 2027. Lisa talked about it that we expect the whole company growing more than 80%. We should expect OpEx to grow less than the top line revenue growth rate, less than half of the top line revenue growth rate. So that will drive a very significant operating margin expansion in 2027.

Going back to gross margin, we are actually very happy about where we are with our gross margin. In Q3, we are ramping MI450. Data center AI business is doing very well, actually better than our expectation when we got into the Q3 quarter.

And in Q4, we’re guiding sequentially revenue growing 50% for data center business. It’s actually going to be the quarter data center AI business surpass server business. So we all know there’s a margin, a little bit of dilutive to corporate average, but gross margin dollars are increasing very significantly.

I think looking ahead of 2027, we actually think our data center business will be more than 80% of the total company revenue. So the mix of a data center business is going to drive the company’s gross margin significantly.

The way to think about it is data center AI will continue to ramp through 2027. And the server business is expect to double. So quarter over quarter there may be variations because the mix of those businesses will be a little bit different. In addition, embedded business is strengthening in 2027. I think that will also help our gross margin.

Overall, when you put the whole business model together, what you should expect us to do is significant top line revenue growth, significant gross profit expansion and OpEx growing less revenue growth, which will result in very significant operating margin expansion and the profitability expansion.

Joshua Buchalter, Analyst – TD Cowen: Thank you.

OPERATOR: And the next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question.

Data Center CPU vs. GPU Mix in 2027

Timothy Arcuri, Analyst – UBS: Thanks a lot. Lisa, I’m wondering if you can break down a little bit how a data center is going to look like next year. You did revise server CPU up from up 70 to up more than 100%, but you’re not being super specific about data center AI.

So is the right way to think about it the GPU business will still be bigger in dollars than the server CPU business, but not much? Is that the right way to think about the split? And then how to think about the shape of the year? I know that the GPU business is lumpy, but I imagine it’s probably pretty ratable through the year. Is that kind of fair to think? Thanks.

Lisa Su, Chair and CEO – AMD: Yeah, Tim, maybe let me break down a couple of things. So, first of all, we think 2027 is going to be a very strong momentum year for both the CPU business as well as the data center AI business. And when we gave you some of the markers, you should just consider them markers, right?

So, we’ve said the overall company will grow greater than 80%. And for the data center CPU business, we will about double. And for the data center AI business, it will significantly more than double.

And from that standpoint, you should expect that the data center AI business continues to be, as Jean just said, Q4 is the first quarter where the data center AI business will crossover in terms of size compared to the CPU business. And we would expect both businesses to grow nicely throughout the year. So hopefully that gives you a bit of shape as we go through the year.

Customer Warrants Accounting

Timothy Arcuri, Analyst – UBS: Thanks a lot. And then Jean, I guess, you help us on the warrants? How are they going to layer into the year? Any sort of guardrails you can give us on sort of how to roll that into our model through the year and into 2027? Thanks.

Jean Hu, Executive Vice President, CFO and Treasurer – AMD: Yes, thanks for the question. I think the simple way to think about it is that there are three parts for the warrant.

The first one is we report net revenue, the Q3 revenue, Q4 guide. And one however, we talk about the revenue, it’s always net revenue, which already incorporated the warrant revenue reduction piece, which is determined at the grant date of fair value. So that’s why you should not worry about it. It’s always incorporated in our revenue whenever we talk about the revenue.

The second piece is probably you’re asking is the share count. The way to think about these, the share count only come into diluted share once all the vesting conditions and the exercising conditions are met by our customers. That means the shipment need to be there and some commercial conditions need to be met.

We are going to provide the guidance in 2027 to give you a clear guidance when we believe the share vesting and the exercising conditions are met. That is something we’ll provide transparency once we get into 2027.

The last piece is it’s a non cash charge, quarterly non cash charge, which is a remeasurement of fair value that actually does not impact our non GAAP financial results and the free cash flow. So on the share count, just wait for us to provide you clear guidance when we get there.

Timothy Arcuri, Analyst – UBS: Thank you.

OPERATOR: And the next question comes from the line of C.J. Muse with Cantor Fitzgerald. Please proceed with your question.

Server CPU Units vs. ASPs

C.J. Muse, Analyst – Cantor Fitzgerald: Yes. Good afternoon. Thank you for taking the question. I guess first question, on the server CPU side, you’ve obviously taken your outlook higher. I’m curious how we should be thinking about units versus mix, including higher core count as well as higher ASPs associated with Venice. Is there a way to break that down to help us understand that 100% growth?

Lisa Su, Chair and CEO – AMD: Sure, CJ. So on the server CPU side, when we talk about 100% growth, you should imagine that we are definitely shipping significantly more units. In that, of course, some of those units have higher core counts as we go into Venice. But I would say the growth in revenue is mostly in units and core count and less so in ASPs, although there are some there’s an ASP uplift as we increase core count.

Q1 2027 Seasonality

C.J. Muse, Analyst – Cantor Fitzgerald: Great, thanks. And I guess as a follow-up, just to button down 1Q seasonality, based on what you said tonight, I’m interpreting that we should see kind of normal client and gaming down seasonally in Q1, kind of ratable data center above December. I guess as part of that, any sort of vision for how to think about embedded?

Jean Hu, Executive Vice President, CFO and Treasurer – AMD: For the embedded business, typically there’s a seasonality. We do see overall when we look at the 2027 for the whole year, embedded business is actually going to grow significantly and also strengthening through the year. But typically, Q1, actually, there are some seasonality for embedded business.

C.J. Muse, Analyst – Cantor Fitzgerald: Thank you.

OPERATOR: And the next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question.

Data Center AI Crossover in Q4

Stacy Rasgon, Analyst – Bernstein Research: Hi guys, thanks for taking my questions. I was wondering, I know you said that you hit crossover for GPU versus CPU in Q4 within the context of that 50% guide. I was wondering if you could help us with the magnitude of that crossover. Is it just barely there or is it significantly higher? I’m just trying to get the sizing in my head in terms of the entrance rate in the next year.

Jean Hu, Executive Vice President, CFO and Treasurer – AMD: Yeah. Hi, Stacy. Maybe I’ll give you some color, right? The way to think about it is if you think about the MI450 ramp, it’s very significant step up sequentially from Q3 to Q4.

And that really compared to the server side, server is growing really nicely strongly. But the ramp of data center AI, which surpass the server in Q4, that is a very significant step up. I think the way server business of course is very strong, but the data center AI will be much higher than server business in Q4.

Stacy Rasgon, Analyst – Bernstein Research: In terms of dollars?

Jean Hu, Executive Vice President, CFO and Treasurer – AMD: Yes, in terms of dollars. Yes.

2027 Gross Margin Trajectory

Stacy Rasgon, Analyst – Bernstein Research: Okay, great. And thanks. And for my follow-up, Jean, there were some questions earlier about gross margins next year. I wasn’t exactly quite sure how to interpret your answer in terms of the gross margins next year relative, I guess, to the Q4 rate.

Do think you could give us some color, some highlights on a good entrance rate and a good exit rate for gross margins in 2027? I think the ramps of the different products and everything that are happening.

Jean Hu, Executive Vice President, CFO and Treasurer – AMD: Yes, Stacy, the reason we’re not able to provide you quarter over quarter is really because when you think about the data center mix is the primary driver in 2027. When you have a data center business revenue is more than 80% of the total company business.

And then within data center, the interesting part is that you have a data center AI business that continue to ramp significantly. On the server side, Lisa mentioned that we’re going to double in 2027. Of course, we also know the supply constraint environment and Lisa also mentioned that we’re working with our suppliers to ensure we get more supplies.

So the mix between those two business actually determine what the company’s gross margin will be. Right now, I actually don’t have that visibility. I think we hope both businesses are going to do great and we know they’re going to both doing great.

Q4 actually is a good benchmark to think about it is because Q4 data center AI business is much higher than CPU business. So I think that gave you some idea at that benchmark. Then in 2027 different quarter could be different. There could be variation there.

Stacy Rasgon, Analyst – Bernstein Research: Thank you.

OPERATOR: And the next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question.

Helion Racks for Agentic Workloads

Joe Moore, Analyst – Morgan Stanley: Great. Thank you. We’ve heard quite a bit of positive feedback on the Helion racks. And I wonder if you could talk a little bit about that in the CPU only version of that, what’s different for sort of these agentic workloads versus a traditional rack? And then do you anticipate an attach rate of the GPU blade in a lot of these?

Lisa Su, Chair and CEO – AMD: Sure, Joe. Yes, there is quite a bit of positive excitement around the Helion racks. And I think the main point there is these agentic racks, they really want to be optimized for the environment that they’re in.

So if they are in, let’s call it hyperscaler or large cloud racks, you’re going to have them in all CPU configurations. It’s going to be quite dense. Venice is the, from a performance per socket standpoint, is the best in the industry. And so that will translate into a very strong agentic rack if you fully populate it with CPUs.

But in enterprise areas you will also see the opportunity to mix CPUs and GPUs. And it just allows people to really optimize for the workloads that they’re in.

And it is, we have committed to OCP, so it’s a fully open rack. And I think that is viewed as a positive. And from that standpoint, we’ve gotten very positive feedback from both OEMs and ODMs as well as customers.

Server CPU Demand vs. Supply

Joe Moore, Analyst – Morgan Stanley: Okay. Thank you. And if I could follow-up to the 100% growth in server, do you think you’re meeting demand at that level? Or do you think you still have kind of a shortage condition through all of next year?

Lisa Su, Chair and CEO – AMD: Well, Joe, for us to grow that amount, we’re meeting a lot of demand. And when you look at when we talked about TAM growing, let’s call it, about 50% CAGR over the next three or four years, we saw growth in sort of three areas, right? So traditional cloud and enterprise, agentic CPUs and agentic workloads and head nodes. We believe we’re gaining share in each one of those segments as we give you that forecast of roughly 100%.

I do believe there’s more demand and we are actively working with our supply chain partners to satisfy additional demand. We also have to make sure that the squared sets are there DDR5 and all of the other components are there.

But my view is we are taking a big step up in terms of the demand forecast from our customers. I’m excited about the fact that our demand is broad based. So it is really virtually across every customer in terms of their expansion of their footprint with AMD. And so that’s a positive. And we’re going to continue to work on increasing supply to meet additional demand as it comes to fruition.

Matt Ramsay, VP, Financial Strategy and IR – AMD: John, I’m actually going to ask you to have one more caller join us please. I think we have time for one more questioner. Thank you.

OPERATOR: Thank you. And the final question comes from the line of Jim Schneider with Goldman Sachs. Please proceed with your question.

Hello, Jim. Your line is now live.

Okay. Our final question comes from the line of Harsh Kumar with BMO Capital Markets. Please proceed with your question.

Helios Share Aspirations and Enterprise AI

Harsh Kumar, Analyst – BMO Capital Markets: Yeah. Hey, Lisa. Question is on Helios. So you’re one of two companies shipping complete racks. Can I ask you about what your share aspiration is? And the reason why I’m asking is you’ve done a wonderful job in servers, taking share from basically a very difficult competitor.

And also, the second part of that question is, do you have aspirations to address the enterprise market with the Helios rack and the setup? And then I have a follow-up.

Lisa Su, Chair and CEO – AMD: Sure Harsh. So look, we’re very happy with the progress that we’ve made with Helios. I think this is a significant the rack scale solutions are significant R&D efforts. I think Helios has ramped very nicely. We saw a very good initial quarter in Q3. We’re ramping nicely into Q4 and into 2027.

Our aspirations are to be a very significant compute supplier to our largest customers, both Frontier Labs as well as hyperscalers. And from that standpoint, the focus on Helios and MI450 ramp is very much on our minds for Q4 and 2027.

But we’re in very active dialogues with our largest customers on MI500 and MI600 and beyond. And our aspirations are to continue to have a larger and larger piece of their compute needs. And from everything that we see, demand continues to go up.

So I think that’s the overall view on Helios. Was there another part of that question?

Harsh Kumar, Analyst – BMO Capital Markets: Enterprise.

Lisa Su, Chair and CEO – AMD: Enterprise. Yeah. Sure. Yes, certainly. I think we continue to see, although enterprise is developing, let’s call it a little bit slower than the largest frontier labs and hyperscalers. We do believe that the enterprise business is quite important. We have made a lot of progress in enterprise CPUs.

Many of our enterprise customers are actually asking for our advice as to how to deploy AI and how to ensure that they’re deploying it as efficiently as possible when you think about both on prem as well as cloud deployments.

So we are expanding our portfolio. We’ve introduced some enterprise specific GPUs and that will be a place where we would like to grow our footprint to again be a very strategic supplier to our largest enterprise customers.

Client Pricing Strategy

Harsh Kumar, Analyst – BMO Capital Markets: Understood. And my follow-up is on the client side. Historically, you’ve done a great job managing this business through situations like this. What would be your share keep strategy if your chief competitor was to cut ASPs? Would you try to match them or would you have to just gauge the situation as it goes? Just be curious about how you’re going to manage this.

Lisa Su, Chair and CEO – AMD: Yeah, I think Harsh, our view is PCs are an important market for us in the standpoint of, I’m a big believer in end to end AI deployment, so from cloud to edge to client, and we have a unique portfolio in that fashion.

That being the case, I think we’re always quite disciplined in how we manage. Our focus has really been on the highest value and most profitable segments of the PC market, enterprise, premium consumer, desktop channel. These are places that we do very well.

We do recognize that there’s a good amount of volatility in the low end of the market. And that’s the place where we have the least exposure, frankly, to that portion of the market.

Closing Remarks

Matt Ramsay, VP, Financial Strategy and IR – AMD: All right. Thank you, John, for organizing the Q&A. Thank you, everybody, for joining our call. We really appreciate you spending some time with AMD, and thank you very much for your questions and your attention. Let John go ahead and close the call. Thank you very much.

OPERATOR: Thank you, Matt. And ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines at this time, and have a wonderful day.

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