Advanced Micro Devices Inc. reported first-quarter revenue of $10.3 billion, a 38% year-over-year increase fueled by accelerating demand for its artificial intelligence hardware that pushed its data center division to become the company's primary growth engine.
"We are entering 2026 with strong momentum across our business, led by accelerating adoption of our high-performance EPYC and Ryzen CPUs and the rapid scaling of our data center AI franchise," Chief Executive Officer Lisa Su said in a statement.
The results showed data center revenue surging 57% from a year earlier to $5.8 billion, accounting for roughly 56% of total sales. The company posted non-GAAP earnings per share of $1.37, a 43% increase. The performance comes just a day after HSBC analysts downgraded the stock to Hold, citing a valuation that had become stretched after a 77% rally since the start of April.
For its second quarter, AMD projected revenue of about $11.2 billion, which would represent a 46% increase from the prior year. The strong guidance suggests management is confident that demand for its AI accelerators can continue to capture a share of the market dominated by Nvidia Corp.
Business Segment Performance
The client and gaming division, which includes PC processors, saw revenue increase 23% to $3.6 billion. The embedded business, which serves industrial and edge applications, grew 6% to $873 million.
AMD highlighted major customer wins and expansions, including Meta Platforms Inc.'s plan to deploy AMD Instinct GPUs and become a launch customer for the next-generation "Venice" and "Verano" EPYC processors. Cloud providers including AWS, Google, and Microsoft also expanded their use of AMD's EPYC chips.
The company's financial position strengthened, ending the quarter with a record $2.57 billion in free cash flow and a cash balance of $12.35 billion. In a separate announcement during the quarter, intellectual property licensing firm Adeia Inc. reported it had signed a multi-year license agreement with AMD for its semiconductor portfolio.
What It Means for Investors
The strong earnings and forward guidance provide a firm rebuttal to recent valuation concerns, showing that the operational momentum from AI demand is still accelerating. The results reinforce AMD's position as a primary beneficiary of the AI infrastructure build-out.
Investors will watch the second-quarter results, expected in August, to see if the data center growth trajectory can be maintained and for further commentary on the supply chain's ability to meet demand for Instinct GPUs.
This article is for informational purposes only and does not constitute investment advice.
