Advanced Micro Devices (AMD.O): Management Callback Notes

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05 Aug 2026 06:54:45 ET │ 10 pages

Advanced Micro Devices (AMD.O)

Management Callback Notes

CITI'S TAKE

We spoke with AMD post earnings and recap key takeaways.

• Data center segment - AI revenue around $2.7-2.8B in 2Q. Data center

revenue ~$70B+ in 2027 and GPU sales ~ low-$40Bs in the implied guide.

Better than expected GPU sales for 2027 was primarily driven by upward

revisions by anchor customers.

• Client segment - Client revenue up 23% YoY, units are up 34%, ASP decline

of 6% were driven by lower desktop mix. Record mobile revenue, desktop

sales were affected due to memory constraints.

• Embedded segment. 2Q Embedded revenue was up 19% YoY. 3Q will be up

double-digit QoQ and up significant YoY, accelerate from 2Q. Significant

recovery of roughly 20% YoY in 2027.

• Capex. Going into 2027, capex will be roughly mid-single of sales than

historical 3% of sales to support supply chain especially for CPU ramps

(testing, assembly etc). AMD had planned for significant GPU ramp in

2026-2027, but server CPU demand driven by agentic AI was unexpected.

Buy

Price (04 Aug 26 16:00)

Target price

Expected share price

return

Expected dividend yield

Expected total return

Market Cap

Atif MalikAC

James Bowlin

Kelsey Chia, CFA

• Gross margins. GPU gross margins are below corporate average. 4Q gross

margins ~ 55% due to higher GPU mix. Gross margins in 2027 ~ 55% or

lower due to higher GPU mix. Gross margins could move up with MI500

driven by better yields.

• Purchase commitments. $29-30B purchase commitment in 3Q will be for

wafers, memory, substrates. AMD has minimal CSP commitment/long term

data center leases. AMD needs to provide support to neoclouds and AMD

needs to support the ecosystem.

• Warrants dynamics. Warrants will be counted in fully diluted shares when

they are vested and exercised. They have to purchase up to 1GW before they

can get the first tranche vested. It will take time to ramp to 1GW and will

likely be in 2H27. It won’t be in share count until they are vested and

become fully diluted shares.

• Supply tightness. AMD should be able to achieve some upside to 2027

guidance despite supply tightness. AMD tends to share the HBM pricing

with customers.…