AMD reports Q2 datacenter revenue doubled to $7B year-over-year, driven by AI chip demand from hyperscalers
Advanced Micro Devices disappointed investors with its latest sales outlook, signaling that shareholders expected a greater return from the global expansion of AI data centres. The chipmaker projected third-quarter revenue of US$13 billion (S$16.7 billion), plus or minus US$300 million—above analysts' average estimate of US$12.5 billion, but below some Wall Street forecasts that exceeded US$13 billion. AMD's shares sank 8.8 per cent in postmarket trading following the announcement on August 4.
The reaction underscores the company's challenge in justifying its valuation through accelerated growth. AMD's stock had more than doubled this year, far outpacing the broader market, after the company emerged as a credible alternative to Nvidia in AI processors. In July, chief executive Lisa Su introduced new products positioned to outperform Nvidia's offerings, signaling a more aggressive stance in a market the company projects will reach US$1.4 trillion by 2030—a move that only heightened investor expectations.
AMD's second-quarter results had actually exceeded expectations. Sales rose 50 per cent to US$11.5 billion against analyst estimates of US$11.3 billion, while profit excluding certain items reached US$1.66 per share, beating the forecast of US$1.62. The data centre business more than doubled to US$6.7 billion, surpassing the average analyst prediction of US$6.6 billion. Yet this pattern—reporting positive results and beating guidance, only to see shares decline—has become routine for AMD in recent years.
The timing of AMD's report, late in the tech earnings season, coincided with strong showings from its customers and competitors, raising the bar further. Capital expenditures by major data centre operators are projected to exceed US$1 trillion in 2027, according to Bernstein analysts, as spending on data centres accelerates and fuels demand for processors and infrastructure. Within this booming market, AMD has established itself as a meaningful second supplier to Nvidia in AI accelerators—a market Nvidia pioneered and still dominates. "AMD is evolving from a chip challenger into an AI infrastructure competitor," said Emarketer analyst Jacob Bourne, though he flagged the broader question of whether AMD can sustain that momentum against Nvidia's market leadership.
Beyond accelerators, AMD manufactures central processing units where it is rapidly closing the gap with longtime leader Intel. These generalist chips have experienced a resurgence in data centres, where they support AI services. However, AMD is not insulated from the downsides of the AI data centre buildout. The frenzy has triggered shortages of memory chips, harming manufacturers of personal computers, smartphones, and other devices. The resulting crunch has driven higher prices and reduced supply in the PC market—still AMD's largest segment by volume.