AMD: Grabbing AI megadeals — why isn't the market buying?

AMD (AMD.O) released its Q2 2026 results (quarter ended Jun 2026) after U.S. market close on Aug 5 Beijing time. Key takeaways:

1) Headline results: Q2 revenue was $11.54bn, +50% YoY, slightly ahead of consensus (~$11.3bn). The acceleration was driven mainly by a doubling in Data Center.

GAAP GPM was 53.8%. The year-ago quarter included an ~$800mn impairment tied to China-related controls; excluding that, GPM expanded ~350bps YoY, helped by mix shift toward higher-margin server CPUs.

2) OpEx: $AMD(AMD.US) R&D was $2.53bn (+33.5% YoY). SG&A was $1.40bn (+41.4% YoY). Core OpEx growth trailed revenue growth; core OpEx ratio fell to ~34.1%.

Net income was $2.3bn, impacted by non-recurring items. On an operating basis, core OP was $2.27bn, +29% QoQ, with core OPM rebounding to 19.7%.

3) Segment highlights: Data Center and Client combined topped 80% of total revenue. Growth was led by both segments.

1) Client share gains: revenue $3.06bn, +22.5% YoY. Global PC shipments fell YoY in the quarter, yet Client grew >20% (with ~10% price uplift), implying continued share gains in PCs for AMD.

2) Data Center: server CPUs remained strong, MI455X to ship soon. Segment revenue was $6.7bn, +16% QoQ. Growth was primarily driven by tight supply-demand in server CPUs.

i) Server AI GPUs: AI GPU revenue was ~<$2.7bn>, mainly from the MI355 family. The market is focused on MI455X shipments in 2H26, marking AMD's first move from single-chip to rack-scale cluster delivery. AMD has announced collaborations with OpenAI, Meta, and Anthropic, and MI455X ramp dynamics will directly shape deliveries.

ii) Server CPUs: With AI inference lifting CPU demand, server CPUs have been the major growth driver since 2H last year. Dolphin Research estimates server CPU revenue topped $4.0bn this quarter, +12% QoQ, with AMD's server CPU unit share now above 20%.

4) Guidance: Q3 2026 revenue of $12.7–13.3bn (vs. Street ~$12.6bn), midpoint $13.0bn implies +13% QoQ. AMD guides non-GAAP GPM ~56% (in line with Street 56%).

Dolphin Research view: CPUs underpin near-term; AI rack-scale execution is the swing factor

Q2 largely met market expectations. Top-line acceleration continued, led by a doubling in Data Center this quarter.

Data Center remains the focal point. Dolphin estimates AI GPU (Instinct) revenue at ~$2.7bn vs. ~$1.1bn a year ago (incl. ~$700mn impact from China controls), while server CPUs and other parts reached ~$4.0bn, up >80% YoY, as AI inference boosted CPU demand.

For next quarter, management guides Q3 revenue of $12.7–13.3bn, +10–15% QoQ (Street ~$12.6bn), with non-GAAP GPM ~56% (in line). Assuming other segments are steady, incremental growth likely comes from Data Center at ~$1.2–1.8bn (vs. ~+$1.0bn QoQ this quarter). With MI455X starting to ship, that QoQ step-up is not particularly eye-catching.

Beyond this print, investors are focused on three areas:

a) Hyperscaler capex: CSPs are the primary chip buyers

All four major CSPs reported, and Google, Meta, and Amazon raised capex again. For 2026, Dolphin expects combined capex for the Big 5 (Meta, Google, Microsoft, Amazon, Oracle) to exceed $800bn, up >80% YoY.

The stock's recent pullback was largely beta from capex durability concerns. Post-earnings, reactions diverged, as the focus shifted from ‘capex = growth, more is better’ to ‘capex must monetize faster, with healthy cash flow,’ favoring Amazon and Microsoft. As most are still lifting capex, the ‘AI capex’ narrative remains intact.

b) CPUs: the largest base today

Despite YoY declines in global PC shipments this quarter, AMD delivered +22.5% growth (with ~10% price uplift), underscoring sustained CPU competitiveness.

Across total CPUs (PC + server), AMD's share has continued to rise, with a clear lead over Intel in desktops.

With inference gaining weight, demand for server CPUs to reduce latency and improve efficiency is increasing. This quarter, server CPUs saw both volume and ASP up; Dolphin estimates ASP rose ~10–20% YoY. AMD's share in server CPUs has climbed above 20%.

Debate on server CPUs is limited, and management guided strongly: +80% YoY in 2H26 and >70% in 2027, anchoring high growth.

c) AI GPU progress: MI455 to begin shipping next quarter

Server CPU strength is consensus. The MI455X ramp is the key to re-rating from ‘story’ to ‘reality,’ with OpenAI, Meta, and Anthropic orders centered on compute procurement.

Versus MI355, MI455X adds the Helios rack-scale platform, giving AMD end-to-end delivery from single chips to rack-scale clusters and directly positioning it against Nvidia's Rubin architecture.

Previous MI-series traction was soft due to a lack of cluster-scale solutions. Helios is what large CSPs want, unlocking sizable wins with OpenAI, Meta, and Anthropic (explicitly >14GW).

AMD had already booked 6GW each from OpenAI and Meta, and recently announced Anthropic (2GW) plus Microsoft (GW undisclosed). This has raised confidence that MI455X could be a disruptor in AI compute.

At the current market cap of ~$845.6bn, AMD trades at ~37x 2027 core net income on assumptions of 65% 2-yr revenue CAGR, 55.5% GPM, and 12% tax. Some houses anchor valuation on 2028, but Dolphin prefers 2027 as a nearer yardstick.

vs. last quarter, Dolphin raises estimates, reflecting larger CSP orders and sustained high growth in Data Center. Wins at OpenAI, Meta, Anthropic, and Microsoft signal market recognition of MI455X/Helios into 2H.

Server CPUs are already in an upcycle, providing tangible earnings leverage with limited debate. AI GPUs remain the upside and the multiple driver, with attention squarely on the MI455X/Helios ramp.

Much of AMD's valuation prices in future execution, making the call more important than the print.

Management did not turn more constructive: major customer wins were already in expectations, and no new marquee customers were announced. In addition, the outlook did not surpass consensus, and with MI455 shipping next quarter, the implied QoQ acceleration is modest with no clear raise to full-year AI GPU guidance.

AMD's multiple is well above Nvidia (~17x P/E), embedding share-gain expectations in AI compute. Even with large CSP orders, the market still needs hard evidence in results, and this call did not provide enough confidence.

Only with more large CSP wins and a more decisive outlook can investors gain conviction in MI455X/Helios and see the multiple move above 40x. Given existing debate on MI455X, this print adds uncertainty on competitiveness, likely tempering the premium.

Below is Dolphin Research's detailed read-through of AMD's print:

I. Headline performance: growth accelerating

1.1 Revenue

Q2 2026 revenue was $11.54bn, +50% YoY, slightly above Street (~$11.3bn). The YoY acceleration was primarily driven by a doubling in Data Center.

Server CPUs continued to power growth; Dolphin estimates AI GPU at ~$2.7bn this quarter, with QoQ acceleration led by MI355X demand.

1.2 Gross profit</strong>

Q2 gross profit was $6.2bn, +103% YoY, with GAAP GPM at 53.8%. The year-ago included an ~$800mn China-related impairment; excluding it, GPM expanded ~350bps YoY, mainly on a richer server CPU mix.

For Q3, non-GAAP GPM guidance is 56%, roughly flat QoQ. While server CPU mix helps, the initial MI455X ramp from next quarter could dilute margins near term.

1.3 OpEx

Q2 OpEx was $3.93bn, +36% YoY, with both R&D and SG&A rising meaningfully.

By line item: i) R&D was $2.53bn, +33.5% YoY; ii) SG&A was $1.40bn, +41.4% YoY. Core OpEx growth lagged revenue growth (50%), taking the core OpEx ratio down to 34.1%.

1.4 Profit

Amortization from the Xilinx acquisition will weigh on reported profits for some time, so Dolphin views ‘core OP’ as more indicative of run-rate operations.

Core OP = GP − R&D − SG&A.

Ex-acquisition and other items, Dolphin estimates Q2 core OP at $2.27bn, up sharply YoY. The prior-year quarter was hit by an ~$800mn China-related impact; excluding that, core OP still rose ~133% YoY, driven by Data Center growth and margin recovery.

II. Segment detail: CPU strength is consensus, AI GPU is the swing factor

Data Center and Client are AMD's main businesses, together >80% of revenue. Data Center mix keeps rising on stronger demand for MI-series AI GPUs and server CPUs.

2.1 Data Center

Q2 2026 Data Center revenue was $6.72bn, +107% YoY, slightly above Street (~$6.6bn), driven by server CPUs and AI GPUs.

By product, Dolphin estimates AI GPU at ~$2.7bn, +~$500mn QoQ; server CPUs and related at ~$4.0bn, +12% QoQ.

In detail:

a) Data Center CPUs: with a ‘CPU+GPU’ portfolio, AMD's DC CPU share continues to rise and is now above 20%.

Amid a CPU upcycle and the Zen (Venice) refresh, management guided >80% YoY growth for server CPUs in 2H26 and >70% in 2027.

b) AI GPUs: Revenue is currently driven by MI355X, which began volume in 2H last year. As MI355X ships at the chip level rather than rack level, quarterly AI GPU revenue is still sub-$3bn and relatively modest.

For 2026, Dolphin expects Big 5 CSP capex (Meta, Google, Microsoft, Amazon, Oracle) to exceed $800bn, up >80% YoY. Most majors are still lifting capex, sustaining the ‘AI capex’ narrative.

For the MI450 family, AMD plans deep integration with the Helios rack platform, enabling delivery from single-chip to rack-scale clusters, directly comparable to Nvidia's Rubin architecture and aligned with CSP demand.

Helios integrates Venice CPUs, MI455X GPUs, Pensando networking, and ROCm software. In inference, throughput per rack at equal power is 15% higher vs. peers, with tokens per dollar up to 30% higher.

AMD has secured OpenAI, Meta, Anthropic, and Microsoft as key customers, bolstering confidence in MI455X's order capture. However, management did not raise full-year AI GPU guidance (prior $14–15bn), leaving execution risk around order conversion.

2.2 Client

Q2 2026 Client revenue was $3.06bn, +22.5% YoY, in line with Street (~$3.0bn). Growth was driven by CPU price increases and share gains vs. Intel in PCs.

Industry data show Q2 2026 global PC shipments at 68.2mn units, down YoY. Meanwhile, AMD's Client rose ~23% YoY (with ~10% price uplift). Despite a soft PC market, product competitiveness drove outperformance.

2.3 Other segments

1) Gaming: Q2 2026 revenue was $780mn, -30.6% YoY, reflecting the console downcycle. Year 7 of the cycle in 2026 implies a transition period ahead of refresh.

2) Embedded: Q2 2026 revenue was $980mn, +18.6% YoY, driven by test & measurement/simulation, aerospace & defense, networking, and communications.