AMD posts record first-quarter results, driven by skyrocketing data center CPU demand — company expects consumer and gaming revenue to decline in Q2 over rising memory and component costs

On Tuesday, AMD reported its financial results for the first quarter of 2026. Driven by record demand for AMD's EPYC server processors, Ryzen CPUs, and Instinct accelerators, the company's revenue totaled $10.253 billion, slightly down quarter-over-quarter (QoQ), but up significantly year-over-year (YoY). Furthermore, AMD raised its long-term outlook for the server CPU market, expecting it to reach $120 billion by 2030 due to increased demand from AI and agentic AI workloads. At the same time, the company admitted that sales of its AI accelerators were down sequentially.

For the quarter ending March 28, AMD generated $10.253 billion in revenue, down slightly from $10.270 billion in the fourth quarter, but up 38% compared to $7.438 billion in the first quarter of 2025. The company's GAAP net income nearly doubled to $1.383 billion from $709 million as its gross margin hit 53%, up 3% YoY. Operating income rose 83% year-over-year to $1.476 billion.

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"We delivered an outstanding first quarter, driven by accelerating demand for AI infrastructure, with Data Center now the primary driver of our revenue and earnings growth," said Dr. Lisa Su, AMD chair and CEO. "We are seeing strong momentum as inferencing and agentic AI drive increasing demand for high-performance CPUs and accelerators. Looking ahead, we expect server growth to accelerate meaningfully as we scale supply to meet demand."

Data center: A record quarter and great prospects

While traditionally the lion's share of AMD's revenue came from selling processors and system-on-chips (SoCs) for client devices, in the recent years the company's data center segment delivered the bigger portion of the company's revenue while also showing rapid growth. In the first quarter, AMD's data center division earned $5.8 billion in revenue (up 57% year-over-year) and $1.6 billion in operating income (up from $900 million a year ago). AMD said server CPU sales increased more than 50% from the same quarter last year, with both cloud and enterprise demand growing over 50%.

Lisa Su said AMD is seeing significantly higher CPU demand because AI workloads increasingly require CPUs for orchestration, data movement, head-node operations, and agentic AI execution. As a result, AMD now expects the server CPU market to grow at more than 35% annually through 2030 (compared to its prior forecast of around 18% CAGR), reaching $120 billion in 2030. In fact, the company expects sales of its EPYC processors for data centers to increase 70% year-over-year and sales of Instinct AI accelerators to be up 46% YoY in the second quarter.

 "In response to this demand, we are working closely with our supply chain partners to meaningfully increase our wafer and back-end capacity to support this growth," Su said. "As a result, we now expect server CPU revenue to grow by more than 70% year-over-year in the second quarter, with robust growth continuing through the second half of 2026 and into 2027 as we ramp our next generation EPYC processors."

AMD also revealed deeper engagement with major AI infrastructure customers. During the quarter, the company expanded its partnership with Meta, which plans to deploy up to 6 GW of AMD Instinct GPUs across several generations, including custom Instinct MI450-based accelerators integrated into AMD's Helios rack-scale AI platform. AMD said shipments tied to the Meta deployment are scheduled to begin in the second half of 2026.

In addition, the company indicated that demand for its Instinct MI450-series accelerators and Helios systems from its alpha customer is already exceeding its initial expectations for 2027. Furthermore, multiple customers are now evaluating large-scale deployments for both training and inference workloads.

"With this expanded visibility, we have strong and increasing confidence in our ability to deliver tens of billions of dollars in annual data center AI revenue in 2027 and to exceed our long-term growth target of greater than eighty percent in the coming years," Su said.

At the same time, sales of AMD's Instinct accelerators — while growing 38% year-over-year — dropped slightly quarter-over-quarter due to lower sales to customers in China. Nonetheless, the company remains optimistic about Instinct's trajectory in Q2 and then in the second half of the year when the Instinct MI450-series starts to ramp.

AMD not only set its own record in enterprise hardware sales during the quarter, but it continued to outsell Intel, which recorded $5.1 billion in revenue and $1.5 billion in operating income in the first quarter.

Client and Gaming: Great results, but tepid outlook

When it comes to sales of client Ryzen CPUs, Radeon GPUs, and game console SoCs, AMD's revenue increased $3.6 billion, an increase of 23% year-over-year. Client revenue alone reached $2.9 billion, up 26%, driven by strong Ryzen processor demand and commercial PC share gains. Gaming revenue rose 11% to $720 million due to stronger Radeon GPU demand.

" Semi-custom revenue declined year-over-year as expected at this stage of the console cycle, while engagements with customers on next generation platforms remain strong," said the head of AMD. "In graphics, revenue increased year-over-year, led by demand for our latest generation Radeon nine thousand series GPUs.

AMD warned that both client and gaming revenue in the second half of the year would decline by more than 20% compared to the first half because of higher memory and component costs.

" Similar to the PC market, we believe that second half demand in gaming will be impacted by higher memory and component costs, and we are planning the business accordingly," said Su.

Embedded: Slow growth, good prospects

AMD's embedded revenue reached $873 million, up 6% year-over-year as industrial and edge demand improved. The business unit generated $338 million operating income, up from $328 million a year ago. The success of AMD's embedded division was driven by the company's strong positions across a variety of market segments that span from aerospace to communications and from defense to scientific applications.

"Design win momentum for [embedded products] grew by a double-digit percentage year over year, with billions of dollars in new wins across markets, reflecting the continued expansion of our embedded business from a primarily FPGA-focused portfolio to a broader set of adaptive embedded x86 and semi-custom solutions, significantly expanding our TAM," said Su.

Q2 outlook: Massive growth expected

AMD projects Q2 2026 revenue to reach about $11.2 billion ± $300 million. At the midpoint of the guidance, this would represent a 46% increase compared to the same period last year and about 9% growth sequentially. The company also expects non-GAAP gross margin to be around 56%.

"[Q2 results will be ]driven by a very strong growth in our data center segment, [modest] growth in our client and the gaming segment, and a double-digit growth in our embedded segment," said Jean Hu, AMD executive vice president, CFO and treasurer.

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