Advanced Micro Devices, Inc. Q3 FY2025 earnings call

• Delivered outstanding quarter with record revenue ($9.2 billion, up 36% YOY) and profitability. Net income rose 31%, free cash flow more than tripled. - Data center AI: Instinct GPU business accelerated with MI350 Series GPU sales ramping and MI300 Series deployments broadening. Launched ROCm 7. Had significant partnerships with OpenAI, Oracle, etc. MI400 Series and Helios rack in development. - Client and gaming: PC processor business performed exceptionally well with record sales. Gaming revenue soared due to semi-custom and Radeon GPU demand. FSR 4 had rapid adoption. - Embedded: Revenue increased sequentially as demand strengthened in multiple markets. Expanded embedded product portfolio and had strong design win momentum.

Data center segment: Revenue reached a record $4.3 billion, up 22% year-over-year, accounting for approximately 46.7% of total revenue. Driven by the ramp of Instinct MI350 Series GPUs and server share gains. Server CPU revenue hit an all-time high. Cloud sales were record-breaking with hyperscalers expanding EPYC CPU deployments. Enterprise adoption of EPYC server increased sharply. Client and gaming segment: Revenue was a record $4 billion, up 73% year-over-year. PC processor business had record quarterly sales with Ryzen 9000 processors driving growth. Gaming revenue reached $1.3 billion, up 181% year-over-year, driven by semi-custom revenue and Radeon 9000 family. Embedded segment: Revenue decreased 8% year-over-year to $857 million, but sequentially increased as demand strengthened across multiple markets. Expanded embedded product portfolio with new solutions, and had strong design win momentum with over $14 billion in design wins year-to-date.

• Fourth quarter 2025 expected revenue approximately $9.6 billion, ±$300 million. Midpoint represents ~25% YOY growth. Non-GAAP gross margin expected ~54.5%, non-GAAP operating expenses ~$2.8 billion. - On track to launch next-generation 2-nanometer Venice processors in 2026. MI400 Series and Helios rack to launch in 2026. Have large partnerships with OpenAI, Oracle, etc., with potential for significant revenue over next few years.

• Today's discussion contains forward-looking statements based on current beliefs, assumptions, and expectations, which involve risks and uncertainties that could cause results to differ materially from current expectations. - The situation with MI308 is dynamic, and its impact on revenue is still uncertain as it depends on the demand environment.

Q: For the near term, could give sense of CPU, GPU mix in Q3 and Q4 and how managing transition from MI355 towards MI400?

A: Strong Q3 data center performance without MI308 sales. MI355 ramped well. Q4 data center strong, with server and data center AI up. MI355 to continue ramping in first half of 2026, MI450 Series to come online in second half of 2026 with sharper ramp.

Q: How thinking about OpenAI's ability to engage with all 3 merchants and ASIC suppliers?

A: Very excited about relationship with OpenAI. First gigawatt to start deploying in second half of 2026, working closely with OpenAI and CSP partners to ensure preparation.

Q: Talk about Helios, discrete sales versus system sales and initial responses from customers?

A: Lots of excitement around MI450 and Helios. OCP reception was phenomenal. Interest in MI450 and Helios has expanded. Early customers for MI450 will be around rack-scale solutions.

Q: Where constraint will be with power requirements and component issues for deployments into next year?

A: Entire ecosystem has to plan together. Working with customers and supply chain partners. Feel good about supply chain being prepared. Ecosystem works hard to address tightness.

Q: Sustainability of CPU trends on data center side, supply constraints and seasonality?

A: CPU demand environment in 2026 expected to be positive. Turin ramp fast, Genoa demand continues. Demand durable, not short-term.

Q: Progress on ROCm 7, competitiveness and breadth of support?

A: ROCm 7 is significant step forward. Made great progress, but always more work to do in augmenting libraries and environment.

Q: Framework for gross margins throughout calendar '26?

A: In general, data center GPU gross margin improves when ramping new generation. Transition period at beginning, then normalize. Priority is revenue growth and gross margin dollars.

Q: Growth expectations through '26 and beyond, OpenAI and customer penetration?

A: Excited about road map. OpenAI relationship important, but have numerous other deep engagements. Expect multiple customers to have significant scale in MI450 generation.

Q: Data center in quarter, which grew more year-over-year, servers or GPUs?

A: Directionally similar, but server is a little bit better.

Q: Influence of OpenAI deal on market position with other customers and customer concentration risk?

A: OpenAI deal has been positive, seen increase of interest. Goal is to have broad set of customers and ample supply for multiple customers in future.

Q: Unpack server strength, unit growth versus ASP expansion in Turin product cycle?

A: Turin has more content, so ASPs grow as it ramps. Genoa demand continues. Broad-based CPU demand due to AI workloads spawning more traditional compute.

Q: Updated views on AI silicon TAM as we look forward?

A: AI compute TAM expected to increase, will provide updated numbers at Analyst Day next week.

Q: Developing relationship with OpenAI and its impact on software stack?

A: Relationship with OpenAI helps strengthen software stack. Work deeply together on hardware, software, systems. Feedback from large customers helps enhance ROCm stack.

Q: Useful lives of GPUs, early indication of longer depreciation?

A: Seen early indications of longer depreciation. Desire for latest GPUs but also need for more AI compute, so both new and older generations are in use.

Q: Posture on MI308, readiness to ship and swing factor?

A: Still dynamic situation with MI308. Received some licenses, but demand environment still uncertain. Have work in process but will depend on demand environment.

Q: How AMD differentiates in large megawatt announcements market and structure of OpenAI deal?

A: AMD differentiates with strong products like MI450 Series, total cost of ownership, deep partnerships. OpenAI deal was unique with aligned incentives, and there are other opportunities to participate in the ecosystem.