Advanced Micro Devices Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Thomas O'Malley - Barclays Services Corp - Analyst : Hey, thank you for taking my questions, and I appreciate it, Lisa. I wanted to start on the Client business. So you had previously laid out a second-half outlook that was roughly flattish with the first half as you're kind of protecting against some pull-forwards. So first, do you think that your Q2 results included some pull-forwards, and the second half should still be flattish? And longer term, after the Intel commentary regarding 18A, maybe what that means is a knee-jerk reaction just right away for AMD longer term in terms of share and ASPs.

Question: Thomas O'Malley - Barclays Services Corp - Analyst : Super helpful. And then secondly, I was hopeful you could provide us a little more color on China. So the guide doesn't include MI308, but perhaps you could comment on when you get approval, if the supply chain's ready, what's currently in inventory? And maybe compare what you think the contribution will look like versus the $700 million in Q2 and the $800 million for the second half you spoke about in April?

Question: Vivek Arya - Bofa Merrill Lynch Asset Holdings Inc - Analyst : Thank you for taking my question. Lisa, if we look into 2026, right, that's when I think the sovereign opportunity could get quite meaningful for AMD. What is the right way to size that? What does this JV structure mean with some of the contracts that you signed? And would you consider this incremental to the kind of growth rate that you're seeing with your current MI business, or would this be instead of? So just if you could give us a way to size what is that incremental opportunity from sovereign customers when it comes to 2026? Does it depend on the MI400, right, in which case it might be more back-end dated, etc. So just some ways to think about sovereign for AMD next year.

Question: Vivek Arya - Bofa Merrill Lynch Asset Holdings Inc - Analyst : All right, and for my follow-up, I wanted to ask about gross margins for your MI product. So I understand in the early days, right, it has been dilutive. What kind of sales level is required for it to start becoming additive to margins? And let's say if I fast forward to Q4 and assume that your Q4 sales are growing year on year roughly the same rate as Q3 sales, should we expect gross margins to kind of stay at these Q3 levels, or are there other plus-minus drivers we should think about in terms of gross margins as you go into Q4?

Question: Timothy Arcuri - UBS AG - Analyst : Thanks a lot, Lisa. So my question is on Data Center GPU. You did say that June is up year over year, so it sounds like it's maybe a little more than $1 billion dollars. And you used words like strong ramp into the back half of the year. Can you give us just any color on what that means? Can you get to say $7 billion for the year, and can you give us maybe a milepost on what you're assuming for Q3 would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 05, 2025 / 9:00PM, AMD.OQ - Q2 2025 Advanced Micro Devices Inc Earnings Call

Question: Timothy Arcuri - UBS AG - Analyst : Thanks a lot. And then Lisa, just on that point also, you did talk about a new Developer Cloud. So obviously you're beginning to lease back some of the capacity that you're selling into the clouds and the neo-clouds. Is that going to be a material portion of the revenue you're going to recognize for MI355 in the back half of the year? Can you just talk about that and maybe how to think about how much demand that's going to stimulate and what the ultimate goal is for that cloud? Thanks.

Question: Joshua Buchalter - Cowen and Company LLC - Analyst : Hey guys, thank you for taking my question. I wanted to ask about lead times on the Instinct family, both for the MI350 group family and MI400. I mean, as you move into larger cluster sizes, which it sounds like you're doing at least with Oracle on MI350 and then endeavor to do more so on MI400, how much visibility and lead time do you need from your customers? Because I would imagine the lead time for your parts is measured in months, but on the infrastructure side, in particular for the larger scale deployments, those things are measured in years at this point. So maybe you could speak to the visibility specifically on the MI400. Thank you.

Question: Joshua Buchalter - Cowen and Company LLC - Analyst : Thank you for that, Lisa. And maybe for Jean, I wanted to follow up on Vivek's question earlier on gross margins. So if we add back the charges in Q2, and then your gross margin implied in the guidance is roughly flat sequentially. And that's despite what's implied to be Data Center GPUs up meaningfully sequentially. It doesn't seem like consoles are falling off in the third quarter. Can you maybe talk to the underlying drivers of how you're able to keep the flat gross margins despite what sounds like still margin-dilutive Data Center GPUs up significantly within the mix? Thank you.

Question: Joseph Moore - Morgan Stanley - Analyst : Great, thank you. You've used this language before of the kind of tens of billions opportunity around MI400. Can you talk about that -- the time frame when that might occur? And not to pin you down too much, what would help you get to that level sooner rather than later? Should we think of that as a 2027 realistic outcome that you could be looking at $20 billion-plus? Just a little bit more color on that tens of billions coming.

Question: Joseph Moore - Morgan Stanley - Analyst : Right, that's helpful. Thank you. And then as these workloads evolve, I mean, you've sort of talked about inference and training as sort of different opportunities for AMD. Are you seeing those start to come together? It seems like with inference, the reasoning models are requiring much higher complexity. Is rack scale more important to the inference market than you thought it might be? Just any color around how that complexity of inference is impacting you guys.

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah, thanks for taking the question. I do have a follow-up as well. I guess the first question is, when we look at the Data Center guide, Jean, you alluded to double-digit sequential growth. Obviously the MI355 series is kind of ramping. I'm curious, how could we conceptualize what you're expecting in the Server side? And where do you think your market share is today in traditional enterprise servers outside of cloud?

Question: Aaron Rakers - Wells Fargo Securities LLC - Analyst : Yeah. And then as a follow-up, I'm kind of thinking about the China, the MI308 opportunity. When we do see a license, I think you alluded to this earlier, it's going to take a little bit of time to ramp and get the supply chain to satisfy the demand. But I'm curious, the $800 million write-down that you had taken, is there no kind of finished inventory there? Does that come back? Do you have any reversal aspects of that once a license gets approved?

Question: C.J. Muse - Cantor Fitzgerald LP - Analyst : Yeah, good afternoon. Thank you for taking the question. I guess Lisa, I was hoping you could level set us on the Instinct ramp into 2026. How are you thinking about the timing of the handoff from 350 to 400? How are you thinking about Helios contributions? And I guess very importantly, from a customer contribution perspective, how you might see that evolve from traditional hyperscalers to perhaps more sovereign and neo-cloud within the mix.

Question: C.J. Muse - Cantor Fitzgerald LP - Analyst : Yeah, very helpful. And then Jean, I guess the question for you. With the sale of ZT for $3 billion of cash and stock and you only have $3 billion of debt outstanding, how are you thinking about the use of proceeds? Is there saving for a rainy day or bolt-on acquisitions, perhaps more aggressive share buyback? How are you thinking about it today?