It has been about a month since the last earnings report for Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) . Shares have lost about 5.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Advanced Micro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.

AMD Q2 Earnings Beat Estimates, Strong Data Center Aids Revenue Growth

Advanced Micro Devices reported second-quarter 2026 non-GAAP earnings of $1.66 per share, up 246% year over year. The figure beat the Zacks Consensus Estimate by 3.1%.

Revenues increased 50.1% year over year to $11.54 billion and surpassed the consensus mark by 1.9%. The top-line benefited from accelerating EPYC processor demand and the continued ramp of Instinct GPUs.

AMD Data Center Sales More Than Double

Data Center contributed 58% of total revenues. The segment revenues surged 107.3% year over year to $6.72 billion. 

EPYC sales increased more than 70% year over year, supported by record enterprise sell-through and robust cloud demand. Instinct sales more than doubled as adoption of the MI350 Series expanded across AI labs, cloud providers, startups, national laboratories and sovereign AI deployments.

Client and Gaming segment revenues increased 6.1% year over year to $3.84 billion. Client revenues advanced 23% to $3.06 billion, driven by record mobile processor sales and continued market-share gains. Ryzen Pro sales grew more than 50% as commercial adoption expanded. Gaming revenues fell 31% to $779 million due to lower semi-custom sales at this stage of the console cycle.

Embedded segment revenues rose 19% year over year to $977 million. Demand strengthened across networking, aerospace and defense, communications, and test and measurement markets.

AMD Expands Q2 Margins

Non-GAAP gross profit jumped 95.1% year over year to $6.49 billion. Gross margin expanded to 56.2% from 54%, reflecting a favorable mix shift toward higher-value Data Center products.

Non-GAAP operating expenses rose 40% year over year to $3.39 billion as AMD increased research and development spending on AI silicon, systems and software. 

Operating income jumped 245% to $3.09 billion, while operating margin widened 15 percentage points to 27%.

Data Center operating income was $2.10 billion compared with a loss of $155 million in the year-ago quarter, translating into a 31% operating margin. Client and Gaming segment operating income declined 24% year over year to $582 million as higher expenses more than offset the revenue increase. 

Embedded operating income increased 40% year over year to $386 million. Operating margin improved to 40% from 33%, aided by higher sales and a favorable product mix. Management said embedded x86 products are becoming a meaningful growth driver as hyperscalers and networking customers adopt AMD CPUs for data center control functions.

AMD AI Roadmap Supports Growth Momentum

AMD launched Helios, its rack-scale AI platform combining EPYC Venice CPUs, MI450-Series GPUs, Pensando networking and ROCm software. Initial shipments are expected to begin in the third quarter and ramp through the fourth quarter and into 2027.

Management said Helios demand is tracking ahead of its initial volume forecast. AMD also announced that Anthropic plans to deploy up to 2 gigawatts of MI450-Series GPUs, with the first gigawatt beginning in the first half of 2027. Microsoft plans to deploy Helios at scale on Azure for frontier-model inference.

AMD Strengthens Cash and Liquidity

Cash, cash equivalents and short-term investments totaled $13.11 billion, up 6% sequentially. Total debt remained nearly flat at $3.23 billion, providing the company with financial flexibility as it expands supply and funds its AI product roadmap.

AMD generated $2.36 billion in cash from continuing operations and $1.56 billion in free cash flow during the quarter.

AMD Issues Strong Q3 View

For the third quarter of 2026, AMD expects revenues of approximately $13 billion, plus or minus $300 million. The midpoint implies growth of roughly 41% year over year and 13% sequentially.

AMD expects strong double-digit sequential growth in Data Center and Embedded, while Client and Gaming is projected to decline modestly as gaming weakness offsets slight Client growth.

Non-GAAP gross margin is projected at approximately 56%, with operating expenses of nearly $3.65 billion.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a upward trend in fresh estimates.

VGM Scores

At this time, Advanced Micro has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a score of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, Advanced Micro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.