AMD slides 7% after earnings as quarterly capex tops $800 million

AMD shares fell more than 7% in after-hours trading Tuesday after the chipmaker posted record second-quarter revenue alongside a sharp jump in capital spending. Capital expenditures climbed to $808 million for the quarter, up from $389 million in the first quarter and $282 million a year earlier. For the first six months of 2026, capex totaled $1.2 billion, compared with $494 million in the same period last year. Free cash flow fell to $1.56 billion from $2.57 billion in the first quarter, though it was higher than $1.18 billion a year ago. Operating cash flow from continuing operations came in at $2.37 billion, down from $2.96 billion in the prior quarter and up from $1.46 billion last year. Revenue reached a record $11.54 billion, up 50% from $7.69 billion a year earlier and 13% sequentially. Adjusted earnings were $1.66 per share versus $0.48 a year ago. Adjusted net income surged 253% to $2.76 billion, while adjusted operating income rose to $3.09 billion from $897 million. On a GAAP basis, AMD reported net income of $2.3 billion, or $1.38 per diluted share, compared with $872 million, or $0.54 per share, in the same quarter last year. Data center revenue more than doubled to $6.72 billion from $3.24 billion a year ago, fueled by demand for AMD EPYC processors and Instinct accelerators. The segment accounted for 58% of total quarterly revenue and delivered operating income of $2.1 billion. Client and gaming revenue increased 6% to $3.84 billion. Client revenue rose 23% to $3.06 billion, while gaming revenue fell 31% to $779 million due to lower semi-custom revenue. Embedded revenue grew 19% to $977 million and produced operating income of $386 million. AMD ended the quarter with $13.11 billion in cash, cash equivalents and short-term investments, up from $12.35 billion in the first quarter. Total debt was largely unchanged at $3.23 billion. For the third quarter, AMD forecast revenue of about $13 billion, plus or minus $300 million. At the midpoint, that implies roughly 41% year-over-year growth and 13% growth from the prior quarter. The company expects adjusted gross margin to hold around 56%. CEO Lisa Su said data center sales are expected to accelerate in the second half as EPYC demand rises and deployments of Instinct accelerators and the Helios rack-scale platform expand. AMD said Helios systems are being deployed by Anthropic, Meta, Microsoft, OpenAI, Oracle and other AI customers. AMD also announced an agreement with Anthropic covering deployment of up to two gigawatts of MI450 Series accelerators in Helios racks.