Advanced Micro Devices Inc

Equity Research 4 August 2026 | 8:23PM EDT

Advanced Micro Devices Inc. (AMD): Strong 2027 commentary falls short of most bullish expectations; we expect the company to deliver on

Key stock takeaways: We expect the stock to trade lower following a solid quarter James Schneider, Ph.D. | with guidance above the Street, set against very high expectations heading into the Goldman Sachs & Co. LLC quarter. We believe investors were constructively positioned heading into the report Anmol Makkar given optimism around market strength and share gains in server CPUs, as well as | expectations for a strong MI-4XX ramp into 2027. Despite management’s strong Goldman Sachs & Co. LLC

commentary on its Datacenter business for 2027 (well over 100% growth in total, Luya You | with server CPU growth over 70%), we believe the most bullish expectations were Goldman Sachs & Co. LLC likely ahead of this level on revenue and gross margin. However, we expect AMD to Khalil Fenina ultimately deliver Datacenter revenue consistent with our estimate (over $40bn in | Datacenter GPU in 2027) as the company ramps its MI-4XX product beginning in 3Q, Goldman Sachs & Co. LLC

with very strong growth in the server CPU market (driven by Agentic AI and the enterprise datacenter refresh). We reiterate our Buy rating on AMD, as we see the company well positioned to capture an increasing share of overall compute market, driven by an already strong presence in the CPU market and a broadening aperture of key customers in the AI accelerator market.

Quarterly results were slightly above the Street: AMD reported revenue of $11.5 bn, slightly above GS and the Street at $11.3 bn. Gross margin of 56.2% was in line with GS at 56.3% and just above the Street at 56.0%. Operating margin of 26.8% was in line with GS at 26.8% and the Street at 26.7%. Reported non-GAAP operating EPS of $1.66 was just above GS and the Street at $1.61. Datacenter revenue of $6.72 bn was in line with GS at $6.7 bn and the Street at $6.6 bn. Gaming revenue of $779 mn was above GS at $748 mn but below the Street at $791 mn. Embedded revenue of $977 mn was in line with GS at $960 mn and the Street at $971 mn.

n Datacenter segment expectations and GPU ramp: AMD continues to expect its partners to ramp their initial MI4XX shipments in 2H26 and early 2027. The server CPU business reached a record in the quarter, and management continues to see growth in this segment to support customer AI deployments. AMD expects to drive CY27 Datacenter revenue growth of well over 100% YoY. In the medium term, management expects MI-4XX revenue to step up in Q3, with a larger step-up in 4Q and a further step-up in 1Q27. n Server CPU strength: AMD noted strong demand for its server CPUs, and management expects server CPU revenue to grow QoQ in a seasonally down March quarter. Consistent with its Advancing AI event in July, AMD expects the server CPU TAM to grow at a ~50% CAGR through 2030. Management expects

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Goldman Sachs Advanced Micro Devices Inc. (AMD)

its server CPU business to grow over 80% in 2026, and over 70% in 2027 from this higher base. We view this trend as a positive offset to any potential gross margin headwinds associated with ramping new GPU products and racks in 2H26. n Gross margin expectations: AMD noted a number of headwinds and tailwinds which it expects to contribute to its gross margin performance in 2027. Management sees tailwinds to gross margin stemming from strong datacenter CPU growth (expected to be over 70% in 2027) as well its embedded business (currently growing double digits), with headwinds from its Datacenter GPU ramp where gross margins are slightly below corporate average…