SANTA CLARA, Calif. — Advanced Micro Devices said its data center revenue more than doubled in the second quarter as demand for artificial intelligence chips continued to drive growth, although the company's shares fell after investors judged its outlook against elevated expectations for the AI sector.
AMD reported second-quarter data center revenue of $6.72 billion, up 107% from a year earlier, helped by strong sales of its EPYC server processors and Instinct AI accelerators. The segment accounted for about 58% of the company's total revenue during the quarter, underscoring its growing importance as the chipmaker competes with Nvidia in the market for AI infrastructure.
Total revenue for the quarter rose 50% year over year to about $11.54 billion, exceeding analyst expectations, while adjusted earnings also came in above Wall Street estimates, according to company results and market data.
For the current quarter, AMD forecast revenue of approximately $13 billion, plus or minus $300 million, above the average analyst estimate but below some of the most optimistic investor expectations following a sharp rally in the company's shares this year.
Chief Executive Lisa Su said demand for AI computing infrastructure remained robust and projected that AMD's data center business would more than double again by 2027. She said the company was benefiting from expanding deployments of AI accelerators and server processors as cloud providers and enterprise customers increased investment in artificial intelligence systems.
Despite the stronger-than-expected quarterly performance, AMD shares dropped more than 6% after the results as investors focused on the company's forward outlook and ongoing supply constraints affecting advanced semiconductor packaging. Analysts said expectations had risen significantly following recent announcements of AI partnerships and a strong run in the stock, leaving little room for disappointment.
Analysts also noted that AMD maintained its non-GAAP gross margin outlook at about 56% for the third quarter, suggesting continued costs associated with expanding production and supporting large AI deployments even as revenue accelerates.
AMD has sought to narrow the gap with Nvidia in AI computing by expanding its portfolio of data center processors and accelerators while securing major customers, including large cloud providers and AI developers. The company said it expects continued growth in server demand as enterprises and hyperscale customers increase spending on AI infrastructure.
