AMD · Earnings call · 2026Q2T · Full report

Gross Margin Drivers

ADVANCED MICRO DEVICES INC · 2026-08-04 · Importance 37 · Surprise 32

Second-quarter non-GAAP gross margin was 56%, more than 200 basis points higher year-over-year and 80 basis points higher sequentially. Management attributed the improvement to favorable product mix and a larger contribution from the Data Center segment. For 2027, server CPU growth is expected to be accretive to corporate gross margin, while data center AI gross margin is expected to be slightly below the corporate average. Embedded recovery is expected to provide an additional gross-margin tailwind in 2027, with quarterly results dependent on the pace of the server and MI450 ramps.

Key facts

• Gross margin for 2026 first half and Q3 guidance is favorable and AMD expects to continue improving gross margin into 2027 depending on mix between server CPU and data center AI since data center AI gross margin is slightly below corporate average.
• Gross margin for Q2 2026 expanded to 56%, up over 200 basis points year-over-year and 80 basis points sequentially.