AMD has two big engines roaring as it heads into earnings

By Britney Nguyen

AMD has been boosted by robust server demand. Now analysts are looking ahead to the ramp of its new rack-scale offering.

Advanced Micro Devices' recent momentum in server chips means there will be two business areas keenly of interest to investors when the company reports second-quarter earnings on Tuesday.

"The demand environment remains robust" for AMD's (AMD) EPYC server central processing units, Susquehanna analyst Christopher Rolland said in a note to clients, pointing to the company's recent lift of its estimates for the total addressable market to reach $220 billion by 2030.

Rolland said AMD's second-quarter report will likely come in better than forecast thanks to its data-center business, which includes CPUs and graphics processing units.

AMD is expected to report overall revenue of $11.3 billion for the June quarter, according to estimates compiled by FactSet. Its data-center business is expected to see revenue grow 101% from the previous year to $6.5 billion, with $4 billion from server chips and $2.5 billion from AI.

Analysts tracked by FactSet are also looking for adjusted earnings of $1.62 per share, which would represent year-over-year growth of 237%, though the previous year was impacted by export control restrictions on China that AMD said led to inventory and related charges.

The rise of agentic AI has led to a surge in demand for server chips to run those applications, and in some cases, the ratio of central processing units to graphics processing units is reaching parity, Susquehanna analyst Christopher Rolland said.

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Jefferies analyst Blayne Curtis said AMD's recently announced Venice family of server CPUs offers upside going into the second half of the year. He pointed to a possible "material step-up in pricing" for the chips, as average sales prices could reach the range of $3,000 to $5,000, compared with about $1,500 in the first quarter of the year.

Meanwhile, there is also "plenty of upside tied to the pending AI ramp," Curtis said, referring to the rollout of AMD's first-ever rack-scale solution, Helios. The system will be deployed with AMD's next-generation MI450 series of GPUs for customers including OpenAI and Meta Platforms (META).

AMD CEO Lisa Su said during the company's Advancing AI event in July that Helios shipments are on track to start at the end of the third quarter. Investors will be looking for further commentary on AMD's earnings call.

The chip maker has also announced agreements with Microsoft (MSFT) and Anthropic for Helios, signaling adoption is growing, Curtis said. AMD will likely benefit from the rollout in the current quarter, but a significant part of the revenue ramp will happen in the fourth quarter going into next year, he added.

For the third quarter, analysts are anticipating revenue of $12.5 billion, according to FactSet. The consensus also calls for adjusted earnings of $1.89 per share in that period.

-Britney Nguyen

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08-03-26 1231ET