Pacific Securities: AI-driven CPU demand boosts AMD's performance beyond expectations

Zhitong
2026.05.14 01:32

Pacific Securities released a research report indicating that AMD benefits from the growth in AI-driven CPU demand, with first-quarter operating revenue reaching $10.25 billion, a year-on-year increase of 37.9%. Data center business revenue was $5.78 billion, a year-on-year increase of 57.2%, becoming the core growth engine. Gross margin increased to 52.8%, and net profit reached $1.38 billion, a year-on-year increase of 95.1%. The company deepened cooperation with clients such as Meta, driving an increase in the proportion of high-margin products and enhancing overall profitability

According to the Zhitong Finance APP, Pacific Securities has released a research report stating that benefiting from the explosive demand for AI computing power, AMD's (AMD.US) data center business has become the core growth engine, with an increased proportion of high-margin products driving overall profitability enhancement. The company has deep cooperation with leading clients such as Meta (META.US), and the market space for server CPUs and AI chips continues to be revised upwards. AI inference and intelligent applications are reshaping the computing power structure, with the status of CPUs continuously rising.

The main points of Pacific Securities are as follows:

Event

AMD released its financial report for the first quarter of fiscal year 2026, achieving a quarterly revenue of $10.25 billion, a year-on-year increase of 37.9%, and basically flat compared to the previous quarter; gross margin of 52.8%, an increase of 2.6 percentage points year-on-year; net profit of $1.38 billion, a year-on-year increase of 95.1%.

AI-driven data center business growth drives high performance growth

The company's business is divided into three major segments: data center, client and gaming, and embedded. This quarter, the data center business revenue was $5.78 billion, a year-on-year increase of 57.2%, accounting for 56.3% of total revenue, primarily benefiting from the explosive demand for the fifth-generation EPYC server processors and Instinct MI350 series AI acceleration chips, while large-scale procurement by cloud computing giants and AI-related companies supports high growth; client business revenue was $2.89 billion, a year-on-year increase of 25.8%, benefiting from the simultaneous increase in sales and average price of Ryzen series processors; gaming business revenue was $720 million, a year-on-year increase of 11.3%, with recovering demand for standalone graphics cards offsetting the slight decline in semi-custom business; embedded business revenue was $870 million, a year-on-year increase of 6.1%, accounting for 8.5% of total revenue, based on steady recovery in industrial, automotive, and communication market demand. Gross margin increased year-on-year, primarily benefiting from the increased proportion of high-margin data center AI chips and server processors, with the product mix continuously transitioning towards high-end and high value-added. The expense side maintained rational expansion, with R&D expenses of $2.397 billion, a year-on-year increase of 38.7%, focusing on AI accelerators, next-generation CPU/GPU architecture, and advanced process R&D, while marketing and management expenses were $1.253 billion, a year-on-year increase of 41.4%, supporting global market expansion and customer development, with expense growth matching revenue growth, and operational efficiency remaining robust.

Focusing on AI computing infrastructure, product and customer breakthroughs

This quarter, a deep cooperation was reached with Meta, binding large-scale GPU procurement orders, with commitments for large-scale deployment of MI450 series custom chips and sixth-generation EPYC processors. The market space for server CPUs continues to expand, and the company has significantly revised upwards its long-term market space for server CPUs. AI inference and intelligent applications are reshaping the computing power structure, with the status of CPUs continuously rising.

Industry growth momentum continues, company guidance for high growth

The company expects revenue for the second quarter of fiscal year 2026 to be approximately $11.2 billion, with a year-on-year growth rate of about 46%, with a fluctuation of $300 million up or down, and a Non-GAAP gross margin expected to be around 56%. Server CPU revenue is expected to grow significantly year-on-year, and this strong growth momentum will continue. As the company expands supply to meet incremental market demand, the growth of the server business will significantly accelerate, with industry clients' participation in data center GPUs continuing to rise, and the demand scale from leading clients has exceeded previous expectations, with large-scale deployment project reserves also continuously expanding Risk Warning: The advancement of the AI industry is not as expected; the progress of production capacity is not as expected

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